Mastering Financial Modeling: A Professional’s Guide to Building Financial Models in Excel

Preface

The financial crisis of 2007–2009 has highlighted the critical importance of evidence-based decision-making systems, particularly in banks, hedge funds, insurance companies, private equity firms, and other financial institutions. Financial models are an important part of such decision-making systems, and one key lesson from the financial crisis is that financial institutions need to operate models that are simple and easy for all stakeholders who are involved in the decision-making process, including senior managers, to understand.

For example, banks were criticized for their limited understanding of the financial products that they were selling, such as CDOs (collateralized debt obligations), during the run-up to the subprime crisis ...