Book Image

Python for Finance - Second Edition

By : Yuxing Yan
5 (1)
Book Image

Python for Finance - Second Edition

5 (1)
By: Yuxing Yan

Overview of this book

This book uses Python as its computational tool. Since Python is free, any school or organization can download and use it. This book is organized according to various finance subjects. In other words, the first edition focuses more on Python, while the second edition is truly trying to apply Python to finance. The book starts by explaining topics exclusively related to Python. Then we deal with critical parts of Python, explaining concepts such as time value of money stock and bond evaluations, capital asset pricing model, multi-factor models, time series analysis, portfolio theory, options and futures. This book will help us to learn or review the basics of quantitative finance and apply Python to solve various problems, such as estimating IBM’s market risk, running a Fama-French 3-factor, 5-factor, or Fama-French-Carhart 4 factor model, estimating the VaR of a 5-stock portfolio, estimating the optimal portfolio, and constructing the efficient frontier for a 20-stock portfolio with real-world stock, and with Monte Carlo Simulation. Later, we will also learn how to replicate the famous Black-Scholes-Merton option model and how to price exotic options such as the average price call option.
Table of Contents (23 chapters)
Python for Finance Second Edition
Credits
About the Author
About the Reviewers
www.PacktPub.com
Customer Feedback
Preface
Index

Summary


In this chapter, we have discussed one of the most important properties of Python: modules. A module is a package written by an expert or any individual to serve a special purpose. The knowledge related to modules is essential in our understanding of Python and its application to finance. In particular, we have introduced and discussed the most important modules, such as NumPy, SciPy, matplotlib, statsmodels, pandas, and pandas_reader. In addition, we have briefly mentioned module dependency and other issues. Two financial calculators written in Python were also presented. In Chapter 3, Time Value of Money, we will discuss many basic concepts associated with finance, such as the present value of one future cash flow, present value of perpetuity, present value of growing perpetuity, present value of annuity, and formulas related to future values. In addition, we will discuss definitions of Net Present Value (NPV), Internal Rate of Return (IRR), and Payback period. After that, several...