Introduction to Derivative Financial Instruments

Although derivatives are complex financial instruments, internationally known derivative expert Dimitris Chorafas explains them in the simplest possible terms. Simplicity is important because, depending on how they are used derivatives can be friend or foe. The difference lies on how professionals design them, price them, sell them, and manage exposure to risk. Filled with sound advice, proven methods, and detailed case studies, Introduction to Derivative Financial Instruments also covers:

• Financial Innovation - analyzing the evolving field of service science
• Strategic Uses - including balance sheet creativity and associated risk
• Tactical Uses - examining ways of employing derivatives to promote strategic objectives
• Option Traders, Buyers and Writers - introducing readers to the notion of right pricing of these instruments
• Futures and Forwards - showing what they offer to investors, as well as what distinguishes futures from forwards
• Swaps - examining swaps, swaptions, credit default swaps, and other swaps flavors
• Credit Risk and Market Risk with Options - explaining how to avoid inordinate exposure through smart options management
• Hedging - outlining the best hedging types and practices, rules for hedge accounting, and the meaning of right and wrong hedges
• Liquidity, Solvency and Derivatives Exposure - showing how in a panic illiquidity can morph into insolvency
• The Daunting Task of Capital Adequacy - discussing steps for maintaining a capital base adequate for assumed exposure

Comprehensive and up-to-date, Introduction to Derivative Financial Instruments provides a solid account of all basic types and uses of derivatives, describing the many market opportunities they offer, how they fit into portfolio management process, and why risk should be kept under lock and key.