An Introduction to Derivatives and Risk Management

Abstract

As this book goes into its eighth edition, I continue to be amazed at how the derivatives and risk management world have evolved. When I originally drafted a plan for the first edition, I was told by some publishers that there was no market for a textbook on options and futures, as it was pitched at that time, and that the concept had no future. Fortunately, a predecessor of Cengage had the foresight to see that the idea was merely ahead of its time. While much has changed in the financial world over these years, these tools have remained an important force in our economy. Yes, I know that some say derivatives, particularly mortgage securitization and credit default swaps, contributed to our current economic problems. I would only counter that by noting that fire has also contributed to death and destruction but we use it safely and productively every day. We do so because we are informed about the costs, risks, and benefits. And that is the purpose of this book.