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Call to Order 1-800-282-2839 1-860-379-5470 Derivatives Markets, 2nd Edition Author: Robert L. McDonald Please click on the Related Items tab to see this product as part of a package that includes the solutions manual. To be financially literate in today’s market, business students must have a solid understanding of derivatives concepts and instruments and the uses of those instruments in corporations. The Second Edition has an accessible mathematical presentation, and more importantly, helps students gain intuition by linking theories and concepts together with an engaging narrative that emphasizes the core economic principles underlying the pricing and uses of derivatives. Features Concrete Applications complement the pricing discussions. Chapters on financial engineering, corporate applications, and real options all address practical problems. An emphasis on core economic principles helps students develop a deeper, more intuitive understanding of derivatives markets and instruments. For example, the idea that options are a form of insurance is presented at the outset. Integrated treatment of forward contracts and options. The initial chapters cover both forwards and options, illustrating how they are used and incorporating an extended example of hedging by gold-mining and gold-buying firms. This approach helps to unify option pricing; in particular, it makes it clear that the formula for pricing stock options is the same as the formula for pricing currency options. Formulas are motivated, placed in context, and explained intuitively. The goal is to help students build intuition about pricing models through their applications so they can know when a price does not make sense and why. The author provides the student with a framework for thinking about commonality among various derivative instruments. The Theme of Applied Computation is emphasized. Using the pre-programmed Excel spreadsheets that are packaged with the book, students can become more comfortable and fluent with pricing models and their use in spreadsheets, even before they understand the precise mathematical underpinnings. New to This Edition A new chapter on Credit Risk examines the burgeoning market in credit default swaps and related products. A new chapter on Volatility covers volatility estimation, hedging and pricing options with stochastic volatility. An all-new problems book with solutions for every chapter is available to supplement problems in the book. Author: Robert McDonald Robert McDonald is the Erwin P. Nemmers Professor of Finance at the Kellogg School of Management at Northwestern University, where he has been a faculty member since 1984. Professor McDonald's research interests include corporate finance and derivatives. He is the author of Derivatives Markets, a leading textbook now in its second edition, and Fundamentals of Derivatives Markets. He has published a number of papers in leading journals, including early work on real options, and has won several research awards, including the Graham and Dodd Scroll, the Smith-Breeden Prize, and the Review of Financial Studies Prize. Professor McDonald was an editor of the Review of Financial Studies and has served on a number of editorial boards, including the Journal of Finance, Management Science, and the Journal of Financial and Quantitative Analysis. He received a BA in Economics from the University of North Carolina in 1975 and a Ph.D. in Economics from MIT in 1982. Table Of Contents:  Chapter 1 - Introduction to Derivatives Part I Insurance, Hedging, and Simple Strategies Chapter 2 - An Introduction to Forwards and Options Chapter 3 - Insurance, Collars, and Other Strategies Chapter 4 - Introduction to Risk Management Part II Forwards, Futures, and Swaps Chapter 5 - Financial Forwards and Futures Chapter 6 - Commodity Forwards and Futures Chapter 7 - Interest Rates Forwards and Futures Chapter 8 - Swaps Part III Options Chapter 9 - Parity and Other Option Relationships Chapter 10 - Binomial Option Pricing: I Chapter 11 - Binomial Option Pricing: II Chapter 12 - The Black-Scholes Formula Chapter 13 - Market-Making and Delta-Hedging Chapter 14 - Exotic Options: I Part IV Financial Engineering and Applications Chapter 15 - Financial Engineering and Security Design Chapter 16 - Corporate Applications Chapter 17 - Real Options Part V Advanced Pricing Theory Chapter 18 - The Lognormal Distribution Chapter 19 - Monte Carlo Valuation Chapter 20 - Brownian Motion and Ito’s Lemma Chapter 21 - The Black-Scholes Equation Chapter 22 - Exotic Options: II Chapter 23 - Interest Rate Models Chapter 24 - Risk Assessment Chapter 25 - Credit Risk Chapter 26 - Volatility Derivatives Markets and Solutions Manual, 2nd Edition, 2006 Price: $195.00 Derivatives Markets Solution Manual Second Edition Price: $50.00 Financial Mathematics, A Practical Guide for Actuaries and other Business Professionals, 2nd Edition Price: $96.00 Mathematics of Investment and Credit Solutions Manual, 4th Edition, 2008 Price: $30.00 Mathematical Interest Theory, 2nd Edition, 2009 Price: $98.00 Mathematical Interest Theory Student Solutions Manual, 2nd Edition Price: $39.00 Theory of Interest, 3rd Edition Price: $173.00