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5.0 out of 5 stars Chicken Soup for the Financial Analyst's Soul
If you need to build a working valuation model, calculate the risk of a portfolio with 100+ securities, or figure out what return you might expect to get from a portfolio of high-yield bonds, then you'll find Simon Beninga's "Financial Modeling" merits far more than five stars: this is one book that is indispensable.
One of the biggest problems I ran into during my...
Published on July 20 2003 by Dark Mechanicus JSG

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2.0 out of 5 stars Too many errors and inadequacies
As a practioner of financial modeling, I was used to building financial models with SAS, Stata and Matlab, so when I was first asked by my new boss to start using Excel, I checked out this book. Unfortunately, it's grossly inadequate. The worst part is there are full of errors, encompassing typos in the Excel spreadsheets and technical inaccuracies. The coverage of a...
Published on Jan. 13 2003 by Gadgester


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5.0 out of 5 stars Chicken Soup for the Financial Analyst's Soul, July 20 2003
This review is from: Financial Modeling, 2nd Edition (Hardcover)
If you need to build a working valuation model, calculate the risk of a portfolio with 100+ securities, or figure out what return you might expect to get from a portfolio of high-yield bonds, then you'll find Simon Beninga's "Financial Modeling" merits far more than five stars: this is one book that is indispensable.
One of the biggest problems I ran into during my MBA program was the way my professors taught Corporate Finance. I had great profs, true, but they were teaching theoretical concepts from theoretical textbooks. Sure, you learned the basics: CAPM, net present value, basic options and futures, Arbitrage Pricing Theory, VAR and TEV, but I have always maintained that the best way of learning a subject---particularly corporate finance---is by getting your hands dirty and digging into the guts of the material.
Since Corporate Finance, off-balance sheet instruments aside, isn't very dirty, the best way to get a hands-on practical approach in terms of Capital Structure, the appropriate discount rate to use in pricing an asset, risk, and optimal debt and dividends is to program in Excel and Visual Basic. The problem is that many top finance texts don't offer supplemental material to translate the theoretical concepts into actual valuation and spreadsheet models, which any financial analyst will contend is the life-blood of the industry.
With that in mind, Simon Beninga's "Financial Modelling" is a kind of "Joy of Cooking" for initiate investment bankers, corporate financiers, controllers, analysts, and anyone who wants to use core Corporate Finance concepts in the real world. Beninga goes through the standard laundry list of Corporate Finance text topics---from the optimal risky portfolio to the term structure of interest rates---and shows you how to translate these concepts into workable spreadsheet models that can illustrate, illuminate, and get to the heart of a problem.
If you're a new MBA or financial analyst, you'll find much to love in Beninga's approach, and by pairing the newly expanded 2nd edition up with a top theoretical finance textbook (Ross, Westerfield et al.'s "Corporate Finance" is a fine example) you'll get the most out of your MBA program and have a solid foundation for building Excel and Visual Basic financial models that work.
I liken "Financial Modeling" to a cookbook, in that Beninga provides all the ingredients necessary to the model at hand: he begins with a sprinkling of theory, whether it's modeling a bond portfolio's immunization, calculating the cost of capital, estimating a portfolio's Beta with no short-selling, or pricing put and call options using both the binomial theorem and Black-Scholes. His writing is spare, terse, and to the point, but I have learned more about advanced corporate finance theory through Beninga's marvellously pithy writing and copious Excel examples than I have in reading ten 'top of the list' finance books.
In addition to nicely expanded sections on options (including portfolio insurance) and leasing (including the technically sophisticated subject of leveraged leasing, which requires Excel to comprehend), Beninga concludes his sprightly little tome with a section on getting the most out of Excel (useful little shortcuts that a financial analyst will need but may not have heard of) and a nice little introductory primer on programming in Visual Basic.
"Financial Modeling" is an absolute essential if you're going to make Corporate Finance your profession. For an equally elegant and practical treatment of building discounted cash flow models for businesses, the reader would be advised to pick up Beninga's "Corporate Finance", which, while not equally oriented in spreadsheet modeling, is one of the most terse, accessible, and reasonably technically sophisticated Corp-Fin books on the market today.
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2.0 out of 5 stars Too many errors and inadequacies, Jan. 13 2003
This review is from: Financial Modeling, 2nd Edition (Hardcover)
As a practioner of financial modeling, I was used to building financial models with SAS, Stata and Matlab, so when I was first asked by my new boss to start using Excel, I checked out this book. Unfortunately, it's grossly inadequate. The worst part is there are full of errors, encompassing typos in the Excel spreadsheets and technical inaccuracies. The coverage of a lot of topics is also quite superficial, for example, the chapters on calculating the efficient frontier ignore the important question of utility. (That is, the author maximizes wealth instead of utility.) In trying to cover a lot of ground in finance, from leasing to VaR to options, the book ends up doing nothing well, and the effort in presenting some theory before showing how it's implemented in Excel is laudable but ultimately laughable because much of the theory is presented quite poorly. In the end, you may find some value in understanding at a general level how to translate theory into Excel, esp. if you are new to the application.
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5.0 out of 5 stars Very Good - MBA Students This Is a Must Own, Nov. 11 2001
By 
Ifriqiya (Washington, DC) - See all my reviews
This review is from: Financial Modeling, 2nd Edition (Hardcover)
This is a very good book in showing the reader how to utilize and manipulate Excel for financial problem solving and modeling applications. If you are looking for a book that will show you how to build a leverage buy-out or m&a model from scratch, your expectations are way too high. What this book shows you is how to build those types of models by showing you how to model and use various Excel functions to build the various subsections of those types of complicated models and link them all together. I highly recommend this book to MBA students who are career changers and are looking to enter corporate finance or consulting careers where quantative Excel usage is part of the job. This book shows you how to get the most out of Excel, which is a very user friendly software package. The book comes with a CD-ROM which has examples as utilized in the book and homework problems which are good and can be somewhat hard which forces you to learn Excel for financial applications. If you are a quick learner and highly motivated, you will get a lot out of this book. Nothing is to be feared. It is all to be mastered. By buying this book and working out the Excel problems and exercises on my own, my confidence level with Excel and my own modeling skills has shot up. Given what I have learned from this book, i consider the price to be a bargain. This is very much a learning by doing book. You will get a lot out of it.
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5.0 out of 5 stars Excellent book due to its simple practicality, July 18 2001
By 
This review is from: Financial Modeling, 2nd Edition (Hardcover)
I highly recommend this book to any aspiring financial analyst. It is definitely worth it, even at the list price.
Want to master the fundamentals of basic finance using Excel? then this is one of the few books on the market that really meet this need. Want to set up more advanced mathmatics modeling? well as the introduction of this explains, this book is more like a cookbook: it lists the required basic ingredients and the culinary process but if you want to spice the dish (financial model) up, it is up to the individuals to dig out those advanced formulas from the financial trade journals and apply them to the models.
I first saw the first edition of this book in my college library. took it home and was EXCITED. I was looking for a practical book that would show me the intricacies of Excel for setting up financial models and this was like a god-sent. Like one of the other reviewers said, this book combined basic finance, Excel functions, and VBA programming. To add practicality to this book, Professor Benninga even showed how to download financial data from the internet. Granted it is rather basic, but it adds to the usability of his book, making it a well-round book.
The best parts are end-of-the chapter exercises. Solutions are provided in the accompanying CD-ROM. See how many ways can you solve the same problem.
Professor Benninga always outlines the assumptions and explains the parameters of each model. We should remember that in many instances, unrealistic assumptions lead to way-of-the mark numbers, rendering the whole modeling process and its calculations useless.
Want to become a advanced-level financial modeler? then master the fundamentals first! this book gets you started.
P.S. I also highly recommend to anyone just starting with Excel modeling to read William J. Orvis's Excel for Scientists and Engineers. It is a bit outdated but still highly useful for its chapters on curve fitting, VBA programming and raw data manipulation.
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5.0 out of 5 stars An Indispensable Toolkit, July 7 2001
This review is from: Financial Modeling, 2nd Edition (Hardcover)
This is is spectacularly effective guide to basic financial modelling using Excel and VBA. Far too many financial textbooks confine themselves to theory without giving the student any guidelines on how to put what they have learned into practice - a startling omission in what is a pre-eminently practical field. Benninga has attempted to fill that gap, and he succeeds brilliantly. Using very clear language and a step-by-step approach, he teaches the reader how to actually construct for himself or herself a series of different financial models that are immediately applicable in the real world. There are sections on corporate finance (cash flow) models, basic portfolio models (CAPM applications) and a really good one on option pricing models that has saved my bacon on more than one occasion! Other sections cover topics such as fixed income and Excel/VBA issues. In conclusion, this is a very impressive text, complete with usable models on CD-ROM, that can take you from novice to mid-level quant in a few weeks!
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5.0 out of 5 stars Excellent!! (but DOES have some minor errors), July 4 2001
By A Customer
This review is from: Financial Modeling, 2nd Edition (Hardcover)
The 2nd ed. of Financial Modeling by Simon Benninga (of the Wharton School, U Penn) and Benjamin Czaczkes is an EXCELLENT introduction to: (1) applied finance, (2) utilizing Excel as both a learning tool as well as a practical tool for finance, and (3) to some extent, computational finance. I HIGHLY recommend this book.

However ... CONTRARY to the the reader from London ... this book DOES have some minor errors (and they are errors even to those who ARE DEFINITELY familiar with Excel and VBA). Most of the errors are dealt with on Prof. Benninga's website ...There are some additional errors ... mostly VBA code in the latter chapters of the book (those chapters are devoted to a VBA tutorial) ... but these errors are relatively easy to debug. At any rate, the VBA code on the accompanying CD-ROM seem to be without error.

In spite of that cautionary note, to reiterate, this is an EXCELLENT book for students, academics, and practitioners. I especially found the Excel and VBA tutorial (sans the minor errors already noted) to be useful for teaching, learning, and application.
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5.0 out of 5 stars Real World Financial Modelling, April 20 2001
By 
Franco Arda (San Jose, CA) - See all my reviews
(REAL NAME)   
This review is from: Financial Modeling, 2nd Edition (Hardcover)
Finally a book for the Finance Specialist using Excel. Fantastic explanation of every step, starting at the very beginning of each topic.
I Corporate Finance Models Basic Financial Calculations, Calculation of Cost of Capital, Financial Statement Modeling, Using Financial Statement Models for Valuation, The Financial Analysis of Leasing, The Financial Analysis of Leveraged Leases. Great basics from which you can build your own models, improvements etc.
II Portfolio Models Calculating the Variance-Covariance Matrix, No Short Sale Restriction, Estimating Beta & SML, Short Sale Restriction, VAR. Basic topics in PM, and less used on Excel in the professional world. But, very exciting to gain thorough understanding by doing it on Excel.
III Option Pricing Models My topic. Binomial Model, LogNorm Distribution, B&S Model, Portfolio Insurance, Real Options, Early Excercising. Again, great excerise to do it on Excel for learning purposes. Nice intro on Real Options using Binomial Model, but not my beloved B&S.
IV Bonds and Duration Duration, Immunisation, Modelling the Term Structure, Calculating Default expec.adj. Bond Returns, Cheapest to Deliver. Cannot comment to this topic.
V Technical Considerations Random Numbers, Data Tables, Matrices, The Gauss-Seidel Method, Excel Functions, Some Excel Hints. Matrices explained on Excel! Never seen that before. The rest almost replaces a single Excel Handbook.
VI Introduction to Visual Basic for Applications
User-defined Functions with VBA for Applications, Types and Loops, Macros and User Interaction, Arrays, Objects. The basics of VBA that help you to master many VBA problems.
Fantastic work Simon Benninga!
Check: [...]
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5.0 out of 5 stars Practical Excel Models, Feb. 14 2003
By A Customer
This review is from: Financial Modeling, 2nd Edition (Hardcover)
The simplicity and transparency of many of these models inspires me to give this book five stars. I am an expert modeller and find it useful to have an excel version of many of the more complex models as a cross-check and as a quick desk-top reference. People are often amazed at how quickly I can produce a ball park indication in which the handle is always correct. This book is a must for advanced model builders. If one can't produce a close answer in Excel, one may have to review the fundamentals before embarking on an advanced - and time consuming - model project.
The only shortcoming is in the fastest growing new products in the credit derivatives world, but the methods in this book can be adapted. Tavakoli provides product descriptions in another excellent resource "Credit Derivatives".
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3.0 out of 5 stars Perspective from Student in Finance, March 28 2007
By 
Christopher Gillam "CFA Candidate" (Montreal, Canada) - See all my reviews
(REAL NAME)   
This review is from: Financial Modeling, 2nd Edition (Hardcover)
I'm finishing up my Bachelor's degree this May and find Benninga's book O.K. It's great if you're using it to learn Visual Basic at the same time, or to get a taste of basic financial modeling. However, from the Finance perspective, the author often states information without necessarily explaining where it came from, which is bad if you're just as interested in the CONCEPTS than the actual programming into VB. In any case, my professors who also teach financial engineering use more robust programming software (C++, MathLab, etc.)...

Good if you're interested in the modeling, not so hot if you're interested in the concepts that go with it. A good introductory book, but nothing more. Definitely not reference material.
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5.0 out of 5 stars A very useful book in the practice of Financial Management, Dec 5 2000
By 
Steven S. Schroder (Escondido, CA United States) - See all my reviews
This review is from: Financial Modeling, 2nd Edition (Hardcover)
Thank you for your very excellent text on financial analysis. I found the writing excellent and the examples very useful in developing models. I will be using the specific subjects of "Financial Statement Modeling", "Valuation Analysis" and "Lease Analysis" in my practice. I congratulate you on a well written and documented book. I would very much like further discussion on the calculation of terminal value in chapter 2, page 30....Again, thank you for a most excellent tool. I will continue to use this text in my future work.
Steve Schroder
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Financial Modeling, 2nd Edition
Financial Modeling, 2nd Edition by Simon Benninga (Hardcover - Sept. 18 2000)
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