In recent years the finance industry has mushroomed to become an
important part of modern economies, and many science and engineering
graduates have joined the industry as quantitative analysts, with
mathematical and computational skills that are needed to solve complex
problems of asset valuation and risk management. An important parallel
story exists of scientific endeavour. Between 1965-1995, insightful
ideas in economics about asset valuation were turned into a mathematical
"theory of arbitrage," an enterprise whose first achievement was the
famous 1973 Black-Scholes formula, followed by extensive investigations
using all the resources of modern analysis and probability. The growth
of the finance industry proceeded hand-in-hand with these developments.
Now new challenges arise to deal with the fallout from the 2008
financial crisis and to take advantage of new technology, which has
revolutionized the practice of trading.
This Very Short Introduction introduces readers with no previous
background in this area to arbitrage theory and why it works the way it
does. Illuminating pricing theory, Mark Davis explains its applications
to interest rates, credit trading, fund management and risk management.
He concludes with a survey of the most pressing issues in mathematical
finance today.
ABOUT THE SERIES: The Very Short Introductions series from Oxford
University Press contains hundreds of titles in almost every subject
area. These pocket-sized books are the perfect way to get ahead in a new
subject quickly. Our expert authors combine facts, analysis,
perspective, new ideas, and enthusiasm to make interesting and
challenging topics highly readable.
