Plight of the Fortune Tellers

Plight of the Fortune Tellers
Author: Riccardo Rebonato
Publisher: Princeton University Press
Total Pages: 325
Release: 2010-11-08
Genre: Business & Economics
ISBN: 1400836395

Today's top financial professionals have come to rely on ever-more sophisticated mathematics in their attempts to come to grips with financial risk. But this excessive reliance on quantitative precision is misleading--and puts everyone at risk. In Plight of the Fortune Tellers, Riccardo Rebonato forcefully argues that we must restore genuine decision making to our financial planning. Presenting a financial model that uses probability, experimental psychology, and decision theory, Rebonato challenges us to rethink the standard wisdom about risk management. He offers a radical yet surprisingly commonsense solution: managing risk comes down to real people making decisions under uncertainty. Plight of the Fortune Tellers is a must-read for anyone concerned about how today's financial markets are run. In a new preface, Rebonato explains how the ideas presented in this book fit into the context of the global financial crisis that followed its original publication. He argues that risk managers are still stuck in a probabilistic rut, and need to engage with the structural causes of real events.

The End of Theory

The End of Theory
Author: Richard Bookstaber
Publisher: Princeton University Press
Total Pages: 236
Release: 2019-04-02
Genre: Business & Economics
ISBN: 0691191859

An in-depth look at how to account for the human complexities at the heart of today’s financial system Our economy may have recovered from the Great Recession—but not our economics. The End of Theory discusses why the human condition and the radical uncertainty of our world renders the standard economic model—and the theory behind it—useless for dealing with financial crises. What model should replace it? None. At least not any version we’ve been using for the past two hundred years. Richard Bookstaber argues for a new approach called agent-based economics, one that takes as a starting point the fact that we are humans, not the optimizing automatons that standard economics assumes we are. Sweeping aside the historic failure of twentieth-century economics, The End of Theory offers a novel perspective and more realistic framework to help prevent today's financial system from blowing up again.

Regulating (From) the Inside

Regulating (From) the Inside
Author: Iris H-Y Chiu
Publisher: Bloomsbury Publishing
Total Pages: 358
Release: 2015-11-05
Genre: Law
ISBN: 1509901388

This book examines a key aspect of the post-financial crisis reform package in the EU and UK-the ratcheting up of internal control in banks and financial institutions. The legal framework for internal controls is an important part of prudential regulation, and internal control also constitutes a form of internal gate-keeping for financial firms so that compliance with laws and regulations can be secured. This book argues that the legal framework for internal control, which is a form of meta-regulation, is susceptible to weaknesses, and such weaknesses are critically examined by adopting an interdisciplinary approach. The book discusses whether post-crisis reforms adequately address the weaknesses in regulating internal control and proposes an alternative strategy to enhance the 'governance' effectiveness of internal control.

Consult the Oracle

Consult the Oracle
Author: Gabriel Nostradamus
Publisher: Bloomsbury Publishing
Total Pages: 135
Release: 2013-09-10
Genre: Body, Mind & Spirit
ISBN: 1783660015

“If you sing before breakfast you will cry before supper...' In their own words, what it meant for Victorians to dream of actors, April Fools, herrings or a railway ticket – why it was advised to throw a black snail by its horns over the left shoulder for good luck – and why it is essential to inform bees of a death in the family. “If one drops a knife, a woman is coming; a fork, a man is coming; a spoon, a fool.” Tappings on tables, questionable curatives, old wives' tales and whispers from beyond the grave – Victorians were fascinated by the supernatural. Consult the Oracle was where they might have turned when they needed to identify a witch, interpret an omen or dream, required a natural cure or wanted to divine their future with a pack of cards – or simply wished to understand what the supernatural meant to them and their ancestors. First published in 1899, it offered a layman's guide to 'matters magical and mysterious', and today is a quirky glimpse of a supernatural age now lost, by turns haunting and hilarious.

Modern Pricing of Interest-Rate Derivatives

Modern Pricing of Interest-Rate Derivatives
Author: Riccardo Rebonato
Publisher: Princeton University Press
Total Pages: 486
Release: 2012-01-16
Genre: Business & Economics
ISBN: 1400829321

In recent years, interest-rate modeling has developed rapidly in terms of both practice and theory. The academic and practitioners' communities, however, have not always communicated as productively as would have been desirable. As a result, their research programs have often developed with little constructive interference. In this book, Riccardo Rebonato draws on his academic and professional experience, straddling both sides of the divide to bring together and build on what theory and trading have to offer. Rebonato begins by presenting the conceptual foundations for the application of the LIBOR market model to the pricing of interest-rate derivatives. Next he treats in great detail the calibration of this model to market prices, asking how possible and advisable it is to enforce a simultaneous fitting to several market observables. He does so with an eye not only to mathematical feasibility but also to financial justification, while devoting special scrutiny to the implications of market incompleteness. Much of the book concerns an original extension of the LIBOR market model, devised to account for implied volatility smiles. This is done by introducing a stochastic-volatility, displaced-diffusion version of the model. The emphasis again is on the financial justification and on the computational feasibility of the proposed solution to the smile problem. This book is must reading for quantitative researchers in financial houses, sophisticated practitioners in the derivatives area, and students of finance.