Peterson, Investment Theory and Risk Management

Steven P. Peterson is the director of research and senior risk officer for the Virginia Retirement System; he has also taught at Virginia Commonwealth University’s School of Business for over twenty years. His teaching experience shines through in this book. Although Peterson purports to be writing not only for graduate students but for CFAs and experienced portfolio managers as well, Investment Theory and Risk Management (Wiley, 2012) is essentially a quantitative finance textbook. A very good textbook, I might add.

The author presumes that the reader/student has a grasp of the basic mathematical and statistical tools necessary for quantitative finance. He then shows how these tools can be used to solve real problems in the real world—from retirement planning to portfolio optimization, from dealing with pricing anomalies to hedging portfolio risk.

Normally in my reviews I highlight a chapter or two to give a sense of the book. Well, I tried to do this and failed miserably. I even opted for the chapter entitled “Incorporating Subjective Views.” Without the math, the text seemed to lose its purpose, so I deleted my summary; it would have been a disservice to the author. You’ll have to take it on faith that Peterson has written a smart, engaging textbook.

The book claims to have a companion website, but its url seems to be a well-kept secret. At least I couldn’t find it in the book. The best I could do is the "downloads" link from Wiley’s book description.