This is a webbook under heavy development. At this stage, I'm updating new sections or chapters as soon as they are available. Each section in chapters is presented not only with written content but also with applications in both EXCEL and Python. You would also be able to run python code on the browser and get results following the examples. Each section comes with quiz questions for practice as well. I'm continually trying to enhance each section with richer content and applications, thanks to modern web technology. This webbook is suitable for both undergraduate and graduate students in financial risk management or risk analytics. Currently, it is targeted toward undergraduate students and those who are interested in risk management. Also, anybody who has a good grasp of risk management and derivatives markets but lacks knowledge in Python programming can benefit from the book. If you have any questions, please email me at hkabir at gmail dot com. - M. Humayun Kabir, Ph.D., School of Economics & Finance, Massey University, New Zealand.
Table of Contents
Chapter 1: Introduction to Derivatives
What is a Derivative?
Long & Short Positions
Types of Derivatives markets & Instruments
Why is there a Derivative Market?
Historical Timeline of Derivatives
Chapter 2: Interest Rates, Risk & Returns
Simple Interest Rate
Compound Interest Rate
Continuously Compounding Interest Rate
Zero Rates & Bond
Duration
Chapter 3: Forward & Futures Basics
Chapter 4: Options Basics
Chapter 5: Hedging with Forwards & Futures
Chapter 6: Hedging with Options
Chapter 7: Forward & Futures Pricing
Chapter 8: Option Pricing Basics
Chapter 9: Binomial Option Pricing
Chapter 10: Black-Scholes Option Pricing