Although most universities now have an undergraduate derivatives course,
many instructors were, and still are, in desperate need of a book with
coverage that is both adequate and accessible - as most textbooks on
financial derivatives are either too basic or too advanced for
undergraduate students.
Understanding Derivatives: Options, Futures, Swaps, MBSs, CDOs and
Others, First Edition, provides a broad introduction to the options,
futures, swaps and interest rate options markets, and also provides the
intuition needed to understand the fundamental mathematics of pricing.
In addition, coverage of innovative derivative products such as exotic
options, weather derivatives, catastrophe futures and volatility spreads
has not been neglected. We cover these concepts - without delving into
their pricing or valuation - and conclude with a contemporary issues
chapter that discusses the latest developments in the field.
This book presents a good balance of theory and practice. It is
important for a student of the derivatives market to understand how
arbitrage arguments lead to rational option pricing, why the cost of
carry is crucial to futures pricing, and how a swap dealer determines
the fixed rate on an interest rate swap. These are enjoyable topics to
learn about, and motivated finance students can find them fascinating.
At the same time, it is equally important to understand how the end-user
makes intelligent use of these products as risk management tools.
Additionally, a variety of application examples are included from the
perspective of both the speculator and the hedger.
