Product Description

How do you bring real world scenarios into your course?  Or would you like to?

Business Snapshots (about 60 in total, found in almost all chapters)—Carefully thought out and integrated into the main material in chapters.

• Describe real world situations and interesting issues that are highlighted to illustrate points being made throughout the text.

Completely revised chapters on credit risk and credit derivatives (Ch 20 and 21)—Reflects market developments.

• Makes these chapters in this edition more straightforward and easier to teach.

Opening six chapters have been replaced by seven chapters that cover forward, futures, and swaps in a more student-friendly way.

• The main change here is that the chapter on interest rates has been split into two chapters, one devoted to the math involving interest rates, the other to interest rate futures contracts and how they are used in hedging, which will be easier for students to grasp.

More discussion of how models can be implemented in Excel—Monte Carlo simulation in Chapter 17, GARCH models in Chapter 19, and the variance-gamma model in Chapter 24.

• Includes examples in the book and Excel spreadsheets on Web site to illustrate applications.

 A series of Technical Notes—Available on the author’s Web site to accompany the book.

• Creates a streamlined and more student friendly presentation by including less purely technical material in the book.

Separate chapter on Convexity, Timing, and Quanto adjustments.

• Affords succinct and targeted coverage of these concepts for deeper coverage students need.

 New topics

• For example, the size of derivatives markets is discussed in Chapter 1, Basel II is discussed in Chapter 20, and the variance-gamma model is covered in Chapter 24.

More in-depth coverage

• For example, convexity adjustments to Eurodollar futures in Chapter 5, copula models in Chapters 20 and 21, and executive stock options in Chapters 8 and 13.

Product Details

• Amazon Sales Rank: #181960 in Books
• Published on: 2005-07-07
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 816 pages

Review
featured in 5 of the best - Quality World November 2006

From the Back Cover

One of the exciting developments in finance over the last 20 years has been the growth of derivatives markets. In many situations, both hedgers and speculators find it more attractive to trade a derivative on an asset than to trade the asset itself. Some derivatives are traded on exchanges. Others are traded by financial institutions, fund managers, and corporations in the over-the-counter market, or added to new issues of debt and equity securities. Much of this book is concerned with the valuation of derivatives. The aim is to present a unifying framework within all derivatives-not just options or futures-can be valued.

About the Author
John Hull lectures at the Joseph L. Rotman School of Management from the University of Toronto.

Customer Reviews

One for applied mathies (no lemmas here)
"Options, Futures and Other Derivatives", Hull and/or "Financial Calculus: An Introduction to Derivative Pricing", Baxter & Rennie.

Either of these books individually would represent a good grounding in the mathematics underlying derivative pricing. The two books are very different to each other, though, and it is worth the reader considering his preferred approach before parting with cash. The main differences between the books are:

1. Baxter & Rennie follow a "pure maths" approach, basing the theory around a succession of mathematical theorems. Hull describes this approach in a later chapter, but builds up the theory using an "applied maths" approach, deriving a partial differential equation satisfied by derivative prices.

2. Hull includes background information on the derivative markets; Baxter & Rennie do not.

3. Hull describes how derivatives can be priced in practice, using techniques like Monte Carlo and trees; Baxter & Rennie do not.

If I had to choose one book, my personal preference would be for Hull, but this probably reflects my choice of degree courses. But having read Baxter & Rennie after Hull, my opinion is that the books compliment each other well. When things get so complicated that the intuitive realism of applied maths needs to give way to abstract pure maths (for example in considering quantos or yield curve models), the Baxter & Rennie approach is easier to follow.

A Sound theoretical foundation to the topic
I bought this books mainly to complement my knowledge for a new job, but it was also something I had in my list of books to buy for a while.

John Hull's analysis is very complete and comprehensive. The book requires a foundation knowledge of high-school / engineering algebra and calculus (maybe statistics too).

Being a novice to derivatives trading, I am still wading my way though half-way of the book, with frequient revisit to the previous chapters.

I would highly recommend this to the reader who is serious into understanding the intricacies of derivatives, and who would be patient to go though all the undepinning mathematics.

I would have given this five (or more) stars, if John Hull had included a couple of chapters explaining the very basics for the beginner, and had SOME solutions to the end-of-chapter excercises, rather than having all in another book, "Solution manual to options,...".

Written with rare clarity.
This book ('Hull') is an excellent introduction and guide to derivatives. It's also a good reference - there's enough information so that you probably won't feel you need to buy another, deeper book.

The emphasis is on a description of the various products, as well as how to price them. The emphasis stays on the theory of pricing, rather than delving right down into computer algorithms, so if you need to write derivatives software, I recommend the excellent 'C++ Design Patterns and Derivatives Pricing' by Mark Joshi - but read this book first.

This should definitely be your first book on derivatives. Only after reading several other books on derivatives, after first reading 'Hull', did I realise how clear his book is, and how some other authors manage to make things so confusing.