Financial Toolbox

Solving Sample Problems

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

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

Specifying Additional Constraints

Common Problems in Finance