Publisher's acknowledgments

Preface to the second edition 

Preface to the first edition                     

PART I: RISK AND RETURN                                                                                    

1          Returns (I): Basic concepts                                                                                   

2          Returns (II): Mean returns                                                                                  

3          Risk (I): Total risk                                                                                              

4          Risk and return (I): Portfolios                                                                              

5          Risk (II): Diversification                        &

‘This delivers the essential concepts of modern finance clearly and concisely. My advice: buy this book and keep it close at hand!’ Mark Kritzman, President and CIO, Windham Capital Management, LLC

‘Whilst there are a number of books that purport to offer a quick reference for business professionals, this is the only one that really manages to do this in an effective way.’ Valerio Potì, Director of the MSc in Finance and Capital Markets Program, Dublin City University Business School 

‘This is corporate finance served in bite-sized and digestible portions.’ Elroy Dimson, Emeritus Professor of Finance, London Business School

‘Javier Estrada is to be commended for translating deep economic ideas into terms that are immediately usable, compelling and valuable.’  Robert F. Bruner, Dean of Darden Business School, University of Virginia

Whether you are an executive or a student, beginner or expert, this book is designed to explain and illustrate the working essentials of finance with clarity and speed.

The Financial Times Guide to Understanding Finance deliberately combines essential theory with real-world application, using short, focused chapters to help you find what you need and implement right away.

Originally published as Finance in a Nutshell, this new edition includes:

• Full coverage of risk and return including CAPM, the three-factor model and risk-adjusted returns 
• Stocks and bonds including versions of the DCF model, reverse valuation, relative valuation and issues related to fixed-income securities, pricing and  sources of risk
• Case studies and examples from companies such as Apple, Merrill Lynch, Microsoft, Berkshire Hathaway and Johnson & Johnson
• Accompanying Excel spreadsheets of all the calculations and formulas at www.pearsoned.co.uk/estrada

• The essential book for financial professionals that will help them broaden the scope of their financial knowledge, teaching them all the necessary financial concepts.
• Acting as a desktop companion it will help readers apply the tools and techniques of finance, at the same time combining these techniques with essential theory.
• Questions and answers on the accompanying website will help readers understand the core concepts of corporate finance, banking, options and securities.
• This new edition has been updated to include:

·        Updated tables, using 2009 data onwards

·        A more detailed table of contents

·        Q & A formula answers on the website

·        Details on ‘new’ financial products and instruments developed since the first edition was published

• Benchmark: Finance in a Nutshell (9780273675402), Published August 2005, Life sales 1,146 copies sold (TCM Nielsen Bookscan).

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• Market: The Business Finance market was worth almost £1.5 million in 2009.
• Pearson Education is the second biggest publisher in the Business Finance market, with over 17% market share.