8/05/2011

Modeling Structured Finance Cash Flows with Microsoft Excel: A Step-by-Step Guide.Book & CD-ROM Review

Modeling Structured Finance Cash Flows with Microsoft Excel: A Step-by-Step Guide.Book and CD-ROM
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In structured finance, there is a tremendous discrepancy between academic literature and practice. In purporting a generalizable, scientific approach, many textbooks avoid explaining the intracacies of actual structured finance deals. The fundamental issue is that the implicit value of deal transparency required for issuer and investor tends to be overlooked by authors approaching the field from an academic background. Technical pyrotechnics that suit liquid markets fail when fees, interest rates, and other deal specifics are malleable constructs negotiated among a handful of parties. At the same time, basic bond math on an unsegregated pool of loans cannot accurately describe how assets generate cash flows and the risks faced by investors.

MFSC is the *only* book (afaik) that demonstrates how real structured finance pros bridge the void between these 2 common pitfalls made by other structured finance books. For one, the calculations that belie each component of a structured finance deal is integrated into a single model rather than considered separately. Other books may describe how cash flows pay out in a senior-sub structure, but they won't, for example, take the time to step through how funding costs and triggers affect the cash flows. The primary model also gives the user flexibility to stress the model and enables the user to treat the model as a base for all structured finance deals. Through a neatly organized inputs sheet, each component in the primary model described painstakingly anticipates the gamut of variations common to these types of deals.

All this in a book that's easy to follow and a delight to read. Five stars.


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A practical guide to building fully operational financial cash flow models for structured finance transactions
Structured finance and securitization deals are becoming more commonplace on Wall Street. Up until now, however, market participants have had to create their own models to analyze these deals, and new entrants have had to learn as they go. Modeling Structured Finance Cash Flows with Microsoft Excel provides readers with the information they need to build a cash flow model for structured finance and securitization deals. Financial professional Keith Allman explains individual functions and formulas, while also explaining the theory behind the spreadsheets. Each chapter begins with a discussion of theory, followed by a section called "Model Builder," in which Allman translates the theory into functions and formulas. In addition, the companion CD-ROM features all of the modeling exercises, as well as a final version of the model that is created in the text.
Note: CD-ROM/DVD and other supplementary materials are not included as part of eBook file.

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