Fundamentals of Finance

Reviewed by Joyce Jacobsen, Professor of Economics, Hobart and William Smith Colleges on 1/6/26

Comprehensiveness rating: 2 see less

While it is difficult to define exactly what should be included in a book called “Fundamentals of Finance,” arguably this book does not include all the topics that would be considered fundamental, while also covering foreign exchange in more detail than some books would do. The critical missing areas in my view are: (1) there is no discussion of tax issues in calculating investment returns, such as how capital gains are treated differentially if they are short term or long term or how some bonds are not subject to taxation; (2) there is no treatment of options or futures contracts; (3) there is no treatment of market indexes and index funds; (4) there is no discussion of how to calculate beta; (5) there is no discussion of how to read a basic company balance sheet.

There is neither an index nor a glossary.

Content Accuracy rating: 3

I didn’t have any issues with the vast majority of the word content in terms of accuracy or bias.
But there are some errors in a few of the equations and derivations, including the last line in the derivation on p. 52 of how to calculate the number of periods for an annuity value; the equation on p. 98 which seems to have some wrong notation.; equation 1 in chapter 7 where the notation in the box doesn’t match the explication below it; and equation 3 in chapter 7 where there is nothing on the left hand side.

Relevance/Longevity rating: 5

The basic information is timeless so is not a problem. The text can hopefully be added to over time to provide more useful content. The text links out to some webpages at a few places to show recent figures and recent information about the Australian and World equity markets, which could hopefully either be updated over time, or where the webpages themselves will update when needed.

Clarity rating: 4

I found most of the discussion easy to follow. Chapter 8 is a little more difficult as it is more speculative about the causes of foreign exchange fluctuations.

Consistency rating: 4

The chapters are roughly similar, though they develop their exposition differently from chapter to chapter, with some chapters being more technical and having more worked-out calculational examples, and others (particularly chapter 8) being more discursive.

Modularity rating: 5

I could see where parts of this text would be very useful for review of formulas or for context regarding Australia. I didn’t find that the text was really at all dependent on having read earlier chapters, other than becoming more familiar with the expositional style. The chapters are fairly short and have significantly less content than a typical print textbook would have.

Organization/Structure/Flow rating: 4

The topics in each chapter proceed in logical fashion and the chapters make sense in their ordering. But it would be useful to have a more extended version of the table of contents or have a little table of contents for each chapter at the beginning so that the full structure of the chapter could be viewed in one place.

Interface rating: 3

There are a number of discrepancies in how the fonts and equation formatting are used as one moves through the text. I mostly used the pdf version to read the book, but I looked at the other two versions as well (eBook and online) and the problems seemed to be present in all three versions. Sometimes there are changes of font size and boldness within an equation or an example that are a little puzzling, and the chapters, and even areas within chapters, vary in their formatting of the mathematical material. The diagrams are not identical in style either. Also the use of color backgrounds for some boxes seemed random. All of these interface issues could be dealt with hopefully in a revised edition.

Grammatical Errors rating: 2

When it goes to a revised edition, this text needs a thorough round of copy editing to deal with the large number of grammatical errors, including missing articles, subject-verb discrepancies, missing apostrophes, and misuse of singular vs. plural. It could be written in a smoother more sophisticated style in general.

Cultural Relevance rating: 4

This is probably true of most finance texts, so it is a more general issues, but really people do not appear in this text at all. So in that sense it is not culturally insensitive or offensive, but it is also very impersonal as it does not address how people might have different financial situations depending on their gender, age, background, etc.

This book is very specific to the Australian context in its institutional information. This is both a good and a bad thing, as in for anyone outside of Australia, this book is probably not a good choice because it does not have almost any information about US or European (or Canadian) financial markets and institutions. For the American or British audience, it would not be as useful. It is interesting to read about the Australian institutions (the Australian central bank, the terms for various firm forms, the Australian equity market, etc.) but for most people reading an English-language text on finance, this is probably not preferable to a textbook that would explicate the US, British, or other country institutions in their place. I do appreciate that this open text could be very useful therefore if someone were using a textbook that was not specific to Australia and wanted to augment that material with Australian-specific material from this source.

The other big issue for me, and again this is not a critique necessarily of the book but just something that users may want to know, is that there are no end-of-chapter problems or discussion questions for students to use, so a user would have to provide all of their own problem sets and discussion questions. And of course there are also no provided supplementary materials like PowerPoint slides or a test bank. Which brings me to my final point:

Finally, this was educational for me to compare this book to both the textbook that I generally use to teach finance (Mayo, Introduction to Investments) and to one of the books that the author cites throughout (Graham et al., Introduction to Corporate Finance). Those two books are just so much more comprehensive and thorough that it makes me feel like the open source textbook world has a long way to go to be competitive with the academic publishers’ products, including the supplementary materials that accompany those products.