The substantially revised fifth edition of a textbook covering the
wide range of instruments available in financial markets, with a new
emphasis on risk management.
Over the last fifty years, an extensive array of instruments for
financing, investing, and controlling risk has become available in
financial markets, with demand for these innovations driven by the needs
of investors and borrowers. The recent financial crisis offered painful
lessons on the consequences of ignoring the risks associated with new
financial products and strategies. This substantially revised fifth
edition of a widely used text covers financial product innovation with a
new emphasis on risk management and regulatory reform. Chapters from the
previous edition have been updated, and new chapters cover material that
reflects recent developments in financial markets.
The book begins with an introduction to financial markets, offering a
new chapter that provides an overview of risk--including the key
elements of financial risk management and the identification and
quantification of risk. The book then covers market participants,
including a new chapter on collective investment products managed by
asset management firms; the basics of cash and derivatives markets, with
new coverage of financial derivatives and securitization; theories of
risk and return, with a new chapter on return distributions and risk
measures; the structure of interest rates and the pricing of debt
obligations; equity markets; debt markets, including chapters on money
market instruments, municipal securities, and credit sensitive
securitized products; and advanced coverage of derivative markets. Each
chapter ends with a review of key points and questions based on the
material covered.
