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REVIEW Derivatives Markets Addison Wesley Series in Finance

To be financially literate in today's market business students must have a solid understanding of derivatives concepts and instruments and the uses of I ll admit from the get go that this review is only for the first three parts of Robert L McDonald s Derivative Markets Chapters 1 14 about half of the book which is all my Mathematics of Finance class managed to cover That being said I will definitely be looking forward to getting around to reading the remaining chapters and giving this the full review it deservesOf the chapters my class covered McDonald s treatment of financial concepts and financial derivatives are still just descriptive at the beginning For these early chapters the only math reuired is algebra with perhaps some acuaintancy with basic concepts from probability theory eg expected value some common distributions and some prior background with discounted cash flows and arbitrage analysis These choices by the author make the book incredibly accessible to a wide audience helping students get a firm grasp of the conceptual machinery before delving into technical considerationsBeginning with Part Three the book begins to change gears from the purely descriptive to the increasingly uantitative including the put call parity risk neutral probability the binomial pricing model and the concept of a replicating portfolio state prices with Arrow securities Black Scholes the Greeks and the basics of delta hedging While my class wasn t able to get much past this a uick perusal through the subseuent chapters indicate an increasingly mathematical treatment of the subject matter including an introduction to elements of stochastic calculus like geometric Brownian motion martingales and It s lemmaWhile a particularly expensive book why I m giving it only 45 I definitely see it as a worthwhile investment for any undergraduate finance actuarial science or economics major looking for a handy go to guide on financial derivatives

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Derivatives Markets Addison Wesley Series in Finance

Those instruments in corporations The Second Edition has an accessible mathematical presentation and importantly helps students gain intuition by linki I read most of the chapters as it is a reuired reading for FM and MFE exam I would say the first few chapters are okay but the other chapters are terrible especially the chapters dealing with the mathematics of Back Scholes Formula After reading those chapters I had almost no clue how to manipulate with those differentials until I read the study guide I also thought the sections on early exercise had terrible explanations The author seems to have the tendency of trying to prove some of his claims but his proof is not even a proof It makes the reading even confusing

Robert L. McDonald Þ 8 CHARACTERS

Ng theories and concepts together with an engaging narrative that emphasizes the core economic principles underlying the pricing and uses of derivative Very good descriptions of the strategies I found it to be concise and easy to understand Particularly good if you have some experience with the product but are still a beginner and want to learn it formally


6 thoughts on “Derivatives Markets Addison Wesley Series in Finance

  1. says:

    I'll admit from the get go that this review is only for the first three parts of Robert L McDonald's Derivative Markets Chapters 1 14 about half of the book which is all my Mathematics of Finance class managed to cover That being said I will definitely be looking forward to getting around to reading the remaining chapters and giving this the full review it deservesOf the chapters my class covered McDonald's treatment of financial concepts

  2. says:

    I read most of the chapters as it is a reuired reading for FM and MFE exam I would say the first few chapters are okay but the other chapters are terrible especially the chapters dealing with the mathematics of Back Scholes Formula After reading those chapters I had almost no clue how to manipulate with those differentials until

  3. says:

    Very good descriptions of the strategies I found it to be concise and easy to understand Particularly good if you have some experience with the product but are still a beginner and want to learn it formally

  4. says:

    grrrr

  5. says:

    I've learned about option pricing using binomial trees and stochastic differential euations It's a real page turner

  6. says:

    Very good descriptions of the strategies I found it to be concise and easy to understand