Preparing for the Worst

When dealing with the topic of risk analysis, most books on investments treat downside and upside risk equally. Preparing for the Worst takes an entirely novel approach by focusing on downside risk and explaining how to incorporate it into investment decisions. Highlighting this asymmetry of the stock market, the authors describe how existing theories miss the downside and follow with explanations of how it can be included. Various techniques for calculating downside risk are demonstrated.

This book presents the latest ideas in the field from the ground up, making the discussion accessible to mathematicians and statisticians interested in applications in finance, as well as to finance professionals who may not have a mathematical background. An invaluable resource for anyone wishing to explore the critical issues of finance, portfolio management, and securities pricing, this book:

• Incorporates Value at Risk into the theoretical discussion
• Uses many examples to illustrate downside risk in U.S., international, and emerging market investments
• Addresses downside risk arising from fraud and corruption
• Includes step-by-step instructions on how to implement the methods introduced in this book
• Offers advice on how to avoid pitfalls in calculations and computer programming
• Provides software use information and tips