Frontmatter Page xv Monday, March 8, 2004 10:06 AM
Preface xvSpecial emphasis has been put on describing concepts and mathe-
matical techniques, leaving aside lengthy demonstrations, which, while
the substance of mathematics, are of limited interest to the practitioner
and student of financial economics. From the practitioner’s point of
view, what is important is to have a firm grasp of the concepts and tech-
niques, which will allow one to interpret the results of simulations and
analyses that are now an integral part of finance.
There is no prerequisite mathematical knowledge for reading this
book: all mathematical concepts used in the book are explained, starting
from ordinary calculus and matrix algebra. It is, however, a demanding
book given the breadth and depth of concepts covered. Mathematical
concepts are in bolded type when they appear for the first time in the
book, economic and finance concepts are italicized when they appear for
the first time.
In writing this book, special attention was given to bridging the gap
between the intuition of the practitioner and academic mathematical
analysis. Often there are simple compelling reasons for adopting sophisti-
cated concepts and techniques that are obscured by mathematical details;
whenever possible, we tried to give the reader an understanding of the
reasoning behind these concepts. The book has many examples of how
quantitative analysis is used in practice. These examples help the reader
appreciate the connection between quantitative analysis and financial
decision-making. A distinctive feature of this book is the integration of
notions deeply rooted in the practice of investment management with
methods based on finance theory and statistical analysis.Sergio M. Focardi
Frank J. Fabozzi