The Second edition contains much new material. In Particular:1. There are three new Chapter 2 on banks,Chapter 3 on insurance companies and pension plans,and Chapter 4 on mutual funds and hedge funds. 2. There is a new chapter titled"ABSs,CDOs, and the Credit Crunch of 2007"(Chapter 16). This explains the events that led to the credit crisis of 2007-2009 and the lessons that can be learned from it. 3.There is a new chapter titles"Scenario Analysis and Stress Testing"(Chapter 17).The reflects the importance now placed on stress testing by both financial institutions and their regulators.