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Derivative Pricing and Hedging

  • Nigel J. Cutland
  • Alet Roux
Part of the Springer Undergraduate Mathematics Series book series (SUMS)

Abstract

Chapter 1 begins with an overview of the ingredients of a financial market followed by a brief introduction to the idea of a derivative and the pricing problem for derivatives, using the case of a European call option as an example. It continues with a survey of the more common types of derivative (options, forwards, futures, swaps) and their uses in financial markets for hedging and speculation, and concludes by introducing arbitrage as the key idea used in formulating the notion of a fair price for a derivative, sometimes denoted an arbitrage free price.

Keywords

Financial Market Stock Price Call Option Future Price Future Contract 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Copyright information

© Springer-Verlag London 2012

Authors and Affiliations

  • Nigel J. Cutland
    • 1
  • Alet Roux
    • 1
  1. 1.Department of MathematicsUniversity of YorkYorkUK

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