Risk Management and Financial Institutions

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John C. Hull’s Financial Risk Management text is the only text to take risk management theory and explain it in a “this is how you do it” manner for practical application in today’s real world. Based on one of the most popular MBA courses at University of Toronto entitled “Financial Risk Management”, this text focuses on the ways banks and other financial institutions measure market, credit and operation risk. John C. Hull, author of the book “Options, Futures, and other Derivatives” which became the standard reference text for traders, wrote “Risk Management and Financial Institutions” for use in instruction as well as trade. The practical nature of the book lends itself to a “this is how you do it” presentation style that includes excellent account of the new Basel II regulatory requirement for banks effective in 2007. Features Excellent description of the history of bank regulation and Basel II (a) Provides history of bank regulations and highlights reasons for its importance (b) Gives students perspective on changing regulations (c) Keeps students knowledge current for application in the work environment. Copulas are explained in a relatively unsophisticated way that readers can understand. This brings the student to an understanding of how to quantity how two or more variables depend on each other in a way that is tangible and memorable Discussion of operational risk, model risk, liquidity risk, economic capital and RAROC. Table Of Contents Introduction Financial Products and How They are Used for Hedging How Traders Manage Their Exposures Interest Rate Risk Volatility Correlation and Copulas Bank Regulation and Basel II The VaR Measure Market Risk VaR: Historical Simulation Approach Market Risk VaR: Model Building Approach Credit Risk: Estimating Default Probabilities Credit Risk Losses and Credit VaR Credit Derivatives Operational Risk Model Risk and Liquidity Risk Economic Capital and RAROC Weather, Energy, and Insurance Derivatives Big Losses and What We Can Learn from Them