Financial Products
An Introduction Using Mathematics and Excel

A step-by-step guide to some of the most important ideas in financial mathematics, including options, future contracts, bonds and derivatives.

Bill Dalton (Author)

9780521863582, Cambridge University Press

Hardback, published 2 October 2008

406 pages, 189 b/w illus. 4 tables 8 exercises
25.3 x 17.8 x 2.8 cm, 0.94 kg

Financial Products provides a step-by-step guide to some of the most important ideas in financial mathematics. It describes and explains interest rates, discounting, arbitrage, risk neutral probabilities, forward contracts, futures, bonds, FRA and swaps. It shows how to construct both elementary and complex (Libor) zero curves. Options are described, illustrated and then priced using the Black Scholes formula and binomial trees. Finally, there is a chapter describing default probabilities, credit ratings and credit derivatives (CDS, TRS, CSO and CDO). An important feature of the book is that it explains this range of concepts and techniques in a way that can be understood by those with only a basic understanding of algebra. Many of the calculations are illustrated using Excel spreadsheets, as are some of the more complex algebraic processes. This accessible approach makes it an ideal introduction to financial products for undergraduates and those studying for professional financial qualifications.

Introduction
An introduction to Excel
1. A foundation
2. Forward contracts
3. The futures market
4. Bonds
5. The forward rate, forward rate agreements, swaps, caps and floors
6. Options
7. Option pricing
8. Credit derivatives
Solutions
Index.

Subject Areas: Applied mathematics [PBW], Public finance [KFFD], Financial accounting [KFCF]