An Introduction to Derivative Securities, Financial Markets, and Risk Management: 2nd Edition

Written by two of the most distinguished finance scholars in the industry, this introductory textbook on derivatives and risk management is highly accessible in terms of the concepts as well as the mathematics.

With its economics perspective, this rewritten and streamlined second edition textbook, is closely connected to real markets, and:

• Shows how macroeconomic forces have shaped the markets
• Explains the major derivative pricing models using algebra and introductory calculus
• Shows students how to implement these models using basic statistics and elementary Excel spreadsheet skills
• Discusses the uses of derivatives while warning against their abuses
• Presents hard-to-teach interest rate derivatives in an intuitive manner
Presents the Heath Jarrow Morton model, which is the most advanced derivatives pricing model, in an accessible manner by presenting it side-by-side with classical option pricing theory

Beginning at a level that is comfortable to lower division college students, the book gradually develops the content so that its lessons can be profitably used by business majors, arts, science, and engineering graduates as well as MBAs who would work in the finance industry. Supplementary materials are available to instructors who adopt this textbook for their courses. These include:

• Solutions Manual with detailed solutions to nearly 500 end-of-chapter questions and problems
• PowerPoint slides and a Test Bank for adopters
• PRICED! In line with current teaching trends, we have woven spreadsheet applications throughout the text. Our aim is for students to achieve self-sufficiency so that they can generate all the models and graphs in this book via a spreadsheet software, Priced!

Readership: Undergraduate and graduate students of economics, business, arts, science and engineering, and MBAs who would work in the finance industry.

"The text is pleasantly different from others in the market, especially the clarity of the explanations provided for the concepts involved. The teaching slides provided are the best I have encountered to-date." -- Dr Nagaratnam Jeyasreedharan, University of Tasmania, Australia

"I have read the whole book and I find it excellent. It's a great blend of theory and the 'institutional' aspects of derivatives trading." -- Professor Rafael de Santiago, IESE Business School, Spain

"This book is a great resource for a rigorous introduction to derivatives, both pricing and markets. Thanks to an elaborate set of detailed examples, references to relevant case studies, a full set of worked solutions to problem sets and slides, using this book means reduced prep time without sacrificing the students' learning experience." -- Dr Thijs van der Heijden, University of Melbourne, Australia

"My understanding of derivatives has been purely mathematical, so it's great to learn about all the historical developments, the background material, and all the interesting anecdotes the authors have included." -- Professor Kevin Aretz, University of Manchester, UK

"This book's interest rate derivatives chapters are some of the best chapters I have read, because the authors have provided an outstanding and distinctive work in teaching the basics, examples, and practical applications of interest rate derivatives and the Heath-Jarrow-Morton (HJM) model." -- Professor Scott Fung, California State University, East Bay, USA