Introduction

This section shows how Financial Toolbox functions solve real-world problems. The examples ship with the toolbox as MATLAB files. Try them by entering the commands directly or by executing the code.

This chapter contains two major topics:

• Common Problems in Finance

  Shows how the toolbox solves real-world financial problems, specifically:

  • Sensitivity of Bond Prices to Changes in Interest Rates

  • Constructing a Bond Portfolio to Hedge Against Duration and Convexity

  • Sensitivity of Bond Prices to Parallel Shifts in the Yield Curve

  • Constructing Greek-Neutral Portfolios of European Stock Options

  • Term Structure Analysis and Interest Rate Swap Pricing

• Producing Graphics with the Toolbox

  Shows how the toolbox produces presentation-quality graphics by solving these problems:

  • Plotting an Efficient Frontier

  • Plotting Sensitivities of an Option

  • Plotting Sensitivities of a Portfolio of Options

Solving Sample Problems

Common Problems in Finance

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