Chapter 1. Introduction
Chapter 2. Mechanics of Futures Markets
Chapter 3. Hedging Strategies Using Futures
Chapter 4. Interest Rates
Chapter 5. Determination of Forward and Futures Prices
Chapter 6. Interest Rate Futures
Chapter 7. Swaps
Chapter 8. Securitization and the Credit Crisis of 2007
Chapter 9. Mechanics of Options Markets
Chapter 10. Properties of Stock Options
Chapter 11. Trading Strategies Involving Options
Chapter 12. Binomial Trees
Chapter 13. Wiener Processes and Ito’s Lemma
Chapter 14. The Black-Scholes-Merton Model
Chapter 15. Employee Stock Options
Chapter 16. Options on Stock Indices and Currencies
Chapter 17. Options on Futures
Chapter 18. Greek Letters
Chapter 19. Volatility Smiles
Chapter 20. Basic Numerical Procedures
Chapter 21. Value at Risk
Chapter 22. Estimating Volatilities and Correlations
Chapter 23. Credit Risk
Chapter 24. Credit Derivatives
Chapter 25. Exotic Options
Chapter 26. More on Models and Numerical Procedures
Chapter 27. Martingales and Measures
Chapter 28. Interest Rate Derivatives: The Standard Market Models
Chapter 29. Convexity, Timing, and Quanto Adjustments
Chapter 30. Interest Rate Derivatives: Models of the Short Rate
Chapter 31. Interest Rate Derivatives: HJM and LMM
Chapter 32. Swaps Revisited
Chapter 33. Energy and Commodit Derivatives
Chapter 34. Real Options

Chapter 35. Derivatives Mishaps and What We Can Learn from Them
Chapter 36. Derivatives markets in developing countries

For undergraduate and graduate courses in derivatives, options and futures, financial engineering, financial mathematics, and risk management.
Bridge the gap between theory and practice.
Designed to bridge the gap between theory and practice, this introductory text on the futures and options markets is ideal for those with a limited background in mathematics.
The eighth edition has been updated and improved—featuring a new chapter on securitization and the credit crisis, and increased discussion on the way commodity prices are modeled and commodity derivatives valued.
Provide the right balance: Mathematical Sophistication. In the study of derivatives, if the level of mathematical sophistication is too high, then the material is likely to be inaccessible to many students and practitioners. But if it’s too low, then some important issues may not get the in-depth explanation they need. To help, this text takes a balanced approach to mathematical sophistication by:

• Eliminating nonessential mathematical material or including it in the end-of-chapter appendices and/or technical notes on the website.
• Providing a careful explanation of the concepts that are likely to be new to many readers—along with presenting the concepts with many numerical examples.

• The Options Calculator consists of easy-to-use software for valuing a wide range of options.
• The Applications Builder consists of a number of Excel functions from which users can build their own applications. It includes a number of sample applications and enables students to explore the properties of options and numerical procedures more easily. It also allows more interesting assignments to be designed.

• Chapter 33 now includes increased discussion on the way commodity prices are modeled and commodity derivatives valued.
• Chapter 3 has been simplified and contains an appendix explaining the capital asset pricing model.
• Chapter 12 contains a new appendix to show that the Black-Scholes-Merton formula can be derived as the limiting case of a binomial tree.

For undergraduate and graduate courses in derivatives, options and futures, financial engineering, financial mathematics, and risk management.
Bridge the gap between theory and practice.
Designed to bridge the gap between theory and practice, this introductory text on the futures and options markets is ideal for those with a limited background in mathematics.
The eighth edition has been updated and improved—featuring a new chapter on securitization and the credit crisis, and increased discussion on the way commodity prices are modeled and commodity derivatives valued.
Provide the right balance: Mathematical Sophistication. In the study of derivatives, if the level of mathematical sophistication is too high, then the material is likely to be inaccessible to many students and practitioners. But if it’s too low, then some important issues may not get the in-depth explanation they need. To help, this text takes a balanced approach to mathematical sophistication by:

• Eliminating nonessential mathematical material or including it in the end-of-chapter appendices and/or technical notes on the website.
• Providing a careful explanation of the concepts that are likely to be new to many readers—along with presenting the concepts with many numerical examples.

• The Options Calculator consists of easy-to-use software for valuing a wide range of options.
• The Applications Builder consists of a number of Excel functions from which users can build their own applications. It includes a number of sample applications and enables students to explore the properties of options and numerical procedures more easily. It also allows more interesting assignments to be designed.

NEW! Chapter 36 on Derivatives markets in developing countries

NEW! Cover the credit crisis: New Chapter 8. The new Chapter 8: Securitization and the Credit Crisis of 2007 is entirely devoted to securitization and the credit crisis. The events in the financial markets since the last edition made this update necessary and particularly relevant.
Updated! Present relevant material:

• Chapter 33 now includes increased discussion on the way commodity prices are modeled and commodity derivatives valued.
• Chapter 3 has been simplified and contains an appendix explaining the capital asset pricing model.
• Chapter 12 contains a new appendix to show that the Black-Scholes-Merton formula can be derived as the limiting case of a binomial tree.