The arguments of this chapter arise from the economic and methodological premises on behavior, markets, and institutional structure that together influence asset-valuation. All these are bonded together to explain how methodology defines the domain of financial engineering in mainstream and Islamic perspectives. Mainstream financial engineering as a study of methods that stand upon the assumptions of behavior, markets, and institutions of the neoclassical vintage is critically examined. This is contrasted with the Islamic perspectives of the same issues that outlay an altogether different methodological worldview. Different forms of asset-valuation models emerge in these two cases. The Islamic premise of behavior, markets, and institutions is utilized against the backdrop of its most fundamental episteme. This is the episteme of unity of knowledge (Tawhid). The contrary epistemological foundation of mainstream financial engineering is rationalism and rational economic, scientific, social, and institutional choices. Thus, the parting conceptions of financial engineering applied to asset-valuation make the mainstream and Tawhidi approaches distinct and opposite to each other. This chapter develops and investigates an overlapping generation asset-valuation model in the Tawhidi epistemic context while it examines the unacceptable nature of financial engineering ideas in the mainstream case.