Read e-book online An Introduction to Derivative Securities, Financial Markets, PDF

By Robert A. Jarrow

ISBN-10: 0393913074

ISBN-13: 9780393913071

The first actual introductory textual content in derivatives.

Written by means of Robert Jarrow, one of many actual titans of finance, and his former scholar Arkadev Chatterjea, Introduction to Derivatives is the 1st textual content constructed from the floor up for college kids taking the introductory derivatives direction. the maths is gifted on the correct point and is often encouraged through what’s occurring within the monetary markets. And, as one of many builders of the Heath-Jarrow-Morton version, Robert Jarrow provides a unique, available technique to comprehend this significant subject.

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Extra resources for An Introduction to Derivative Securities, Financial Markets, and Risk Management

Example text

Bonds and stocks require an initial investment. Most bonds pay back a promised amount (principal or par value) at maturity. Some bonds pay interest (coupons) on a regular basis, typically semiannually, while others are zero-coupon bonds that pay no interest but are sold at a discount from the principal. The investment in stock is never repaid. Stockholders usually get paid dividends on a quarterly basis as compensation for their stock ownership. Stock prices can increase and create capital gains for investors, and this profit is realized by selling the stock.

This approach enables us to present the HJM model in a parallel fashion to that of the BSM model, so if you see one, you see them both! O Sixth, option pricing has a fascinating history, filled with colorful people and events. We share this history with the reader. This history is obtained from century-old books (now, uniquely available via the Internet), recent books, newspaper and magazine articles, websites, and personal experiences. O Seventh, we have included enrichment material for the advanced reader through the use of inserts and appendixes.

Stockholders usually get paid dividends on a quarterly basis as compensation for their stock ownership. Stock prices can increase and create capital gains for investors, and this profit is realized by selling the stock. Alternatively, stock prices can decrease and create capital losses. Stocks and bonds are often used to create new classes of securities called derivatives, and that’s where the variety comes in. As previously noted, a derivative security is a financial contract whose value is derived from one or more underlying assets or indexes—a stock, a bond, a commodity, a foreign currency, an index, an interest rate, or even another derivative security.

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An Introduction to Derivative Securities, Financial Markets, and Risk Management by Robert A. Jarrow


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