Professors Ho and Lee are authors of the famous Ho and Lee interest rate model. Both have had long and illustrative careers as academics and practitioners. As one might expect, they have much to say about finance, and that is evident in the physical heft of this book. Weighing 3.3 pounds, it is packed with information. Targeting primarily a university audience, the book is positioned as an alternative to Hull's (2002) aging classic.

Refreshingly, the authors chart their own course. This isn't just an elementary introduction to financial engineering. The book is a soup-to-nuts exploration of modeling in finance. Topics include:

portfolio theory,

equity, fixed income and credit financial engineering,

financial risk management, and

corporate finance, including valuation and real options.

The authors may have been influenced by the Black, Derman and Toy interest rate model. That model was published in a completely non-technical article in the Financial Analysts Journal. Not a single formula appeared in the entire paper yet, in plain English, those authors explained to readers how to implement their model. Such accessibility is no doubt a reason for that model's popularity. In this book, Ho and Lee relegate most formulas to chapter appendices, favoring lengthy plain-English explanations in the body of the text. I think, however, the result is wanting. Black, Derman and Toy labored over the drafting of their paper for months, writing and rewriting it over and over again. It was just a few pages long. This book has 735 pages, so the authors had to spread their efforts more thinly. The writing is good but not brilliant. Honestly, it could use some polishing. More formulas would have clarified discussions. With formulas sparse, I think readers will be frustrated. Another shortcoming is a complete absence of exercises.