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.
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© 2012 Springer-Verlag London
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Cutland, N.J., Roux, A. (2012). Derivative Pricing and Hedging. In: Derivative Pricing in Discrete Time. Springer Undergraduate Mathematics Series. Springer, London. https://doi.org/10.1007/978-1-4471-4408-3_1
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DOI: https://doi.org/10.1007/978-1-4471-4408-3_1
Publisher Name: Springer, London
Print ISBN: 978-1-4471-4407-6
Online ISBN: 978-1-4471-4408-3
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