Derivatives: Markets, Valuation, and Risk Management
Derivatives markets continue to grow at a rapid rate, with thousands of new products or product variations being introduced every year. In order to make sense of this dynamic environment you need a firm understanding of derivative contract valuation and risk management as well as the structure of the markets within which they trade.Author Robert Whaley has more than twenty-five years of experience in the world of finance, and with this book he shares his hard-won knowledge in the field of derivatives with you. Divided into ten information-packed parts, Derivatives will show you how this financial tool can be used in practice to create risk management, valuation, and investment solutions that are appropriate for a variety of market situations.Part One provides a broad overview of derivative contracts and the markets within which they tradePart Two reviews the basic principles of security valuation and helps prepare you for the upcoming discussion of derivative contract valuation and risk measurementPart Three focuses on the valuation of forward contracts and the risk management strategies associated with themPart Four focuses on the valuation of option contracts and the risk management strategies associated with themWith a general valuation/risk measurement framework in hand, you'll then be introduced to derivative contracts in specific asset categories. The remaining parts (5–9) of this comprehensive guide are arranged by the nature of the asset underlying the derivatives contract—stocks are discussed first, then stock indexes, currencies, interest rates or bonds, and finally, commodities. In each part, Whaley provides a flavor of the history of each derivatives market. He also examines any contract idiosyncrasies that may affect valuation principles and explores specific risk management strategies/practices as they apply to the markets for particular asset categories.Derivatives can be used to manage the different types of risks faced by individuals, corporations, and governments. But to effectively implement them takes discipline. Filled with in-depth insights, practical advice, and a companion website that features OPTVAL Excel add-ins and spreadsheets, Derivatives offers valuable guidance on applying this key financial tool to a variety of real-world situations.