Elementary Financial Derivatives: An interview with author Jana Sacks

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  • Author: Statistics Views
  • Date: 05 Feb 2016

Towards the end of last year, Wiley was proud to publish Elementary Financial Derivatives: A Guide to Training and Valuation with Applications by Jana Sacks.

Written as an accessible and appealing introduction to financial derivatives, Elementary Financial Derivatives: A Guide to Trading and Valuation with Applications provides the necessary techniques for teaching and learning complex valuation techniques. Filling the current gap in financial engineering literature, the book emphasizes an easy-to-understand approach to the methods and applications of complex concepts without focusing on the underlying statistical and mathematical theories.

Providing a better understanding of how to assess risk exposure, the book also includes:

  • A wide range of real-world applications and examples detailing the theoretical concepts discussed throughout
  • Numerous homework problems, highlighted equations, and Microsoft Office Excel modules for valuation
  • Pedagogical elements such as solved case studies, select answers to problems, and key terms and concepts to aid comprehension of the presented material
  • A companion website that contains an Instructor’s Solutions Manual, sample lecture PowerPoint slides, and related Excel files and data sets

Elementary Financial Derivatives: A Guide to Trading and Valuation with Applications is an excellent introductory textbook for upper-undergraduate courses in financial derivatives, quantitative finance, mathematical finance, and financial engineering. The book is also a valuable resource for practitioners in quantitative finance, industry professionals who lack technical knowledge of pricing options, and readers preparing for the CFA exam.

thumbnail image: Elementary Financial Derivatives: An interview with author Jana Sacks

1. Congratulations on the publication of the book Elementary Financial Derivatives: A Guide to Training and Valuation with Applications which aims to be step-by-step approach to the mathematical financial theory and quantitative methods needed to implement and apply state-of-the-art valuation techniques. How did the writing process begin?

Teaching of the subject and interacting with students inspired my writing of this textbook above all. Many had pointed out that the way I explain covered concepts is preferable to what they read in the other written materials. That was very inspiring and encouraging.

2. What were your main objectives during the writing process?

My main objective was to fill in a gap that I perceived existed in the market. I needed to produce a text that would be approachable to students right at the outset of their finance curriculum - the undergraduate level. I decided to include a lot of real world examples and focus on a learning-by-doing approach.

3. The book provides the necessary techniques for teaching and learning complex valuation techniques. Filling the current gap in financial engineering literature, the book emphasizes an easy-to-understand approach to the methods and applications of complex concepts without focusing on the underlying statistical and mathematical theories. Please could you explain why this gap had not been filled until now?

Well, the best I can do here is guess. There is number of superb texts dealing with derivative securities and financial engineering out there. The bulk of them, however, is intended for graduate student audiences. Given the ever-growing use of financial derivative instruments, however, I find it important to start educating future finance professionals and investors early on in their academic careers.

4. The book is organized into three comprehensive sections, the book discusses the essential topics of the derivatives market with sections on options, swaps, and financial engineering concepts applied primarily, but not exclusively, to the futures market. Could you please explain these three sections?

These three sections cover the three basic financial engineering instruments. For example – one can think of swaps as extensions of futures contracts. Thus it is necessary to cover the workings of futures to be able to understand swaps. Swaps are the largest of the derivatives markets. Options, the third category, are instruments fairly different from swaps and futures, but can be written on both as the underlying – hence we encounter instruments such as swaptions. Long story short – these three categories are the most essential building blocks in financial engineering.

5. If there is one piece of information or advice that you would want your reader to take away and remember after reading your book, what would that be?

Learning about and using derivative instruments in investing can actually be fun.

6. Who should read the book and why?

I recommend this textbook to undergraduate or first-year graduate finance students, taking an in-class or an online course in financial derivatives. Secondarily, I think that all investors can benefit from learning the basics of derivatives and financial engineering. I believe it would help empower them to lead more productive discussions with their financial managers.

7. Why is this book of particular interest now?

It would have always been of interest. What we see now that is perhaps different is the increasing volumes of personal financial management through fairly inexpensive online brokerages. If a portion of investors prefers to manage their savings on their own, they should be able to learn about all the tools available to them.

8. Were there areas of the book that you found more challenging to write, and if so, why?

I don’t have a specific area, but overall I found that finding a good balance between a simple exposition and still conveying the full message of the problem was, at times, challenging.

9. What is it about the area of mathematical financial theory and quantitative methods that fascinates you?

It is the challenge of improving financial modelling methods to fit ever so closer to our actual reality of financial markets.

10. What will be your next book-length undertaking?

I am not certain yet.

12. You are currently Associate Professor in the Department of Accounting and Finance at St. John Fisher College in Rochester, New York. Please could you tell us more about your educational background and what inspired you to pursue your career in finance?

I completed my Doctorate in Economics and Global Finance at The New School in New York City. My greatest inspiration was one of my professors - Dr. Salih Neftci,. The late Dr. Salih Netci was a renowned professor of mathematical finance and financial engineering. Dr. Neftci agreed to serve as my principal thesis advisor for my Doctoral Thesis entitled: Measuring Synthetic CDO Tranche Premia Instability Due to Alternative Modelling of Default Correlation and Recovery Rates,

Prior to obtaining my doctorate, I interned at Merrill Lynch, Rockefeller Center, where she helped develop proprietary systems for the Andrews Financial Advisory Team.

Prior to Merrill Lynch, I worked at the United Nations Population Fund (UNFPA) in New York City as a consultant in the Resource Mobilization Branch.

Jana Sacks, PhD, is Associate Professor of Finance at St. John Fisher College in Rochester, NY. She has taught courses in Financial Derivatives, Corporate Finance, and Investments.

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