Description: The modern approach to options pricing is based on the premise that prices of the underlying security follow a geometric Brownian motion. Sheldon Ross explores this approach in \ I\ An Introduction to Mathematical Finance\ /I\ , a mathematically elementary entr\+eacute; e to options pricing theory. Incisive chapters present the Black-Scholes theory of options as well as such general finance topics as the time value of money, rate of return of an investment cash flow sequence, utility functions and expected utility maximization, mean variance analysis, optimal portfolio selection, and the capital assets pricing model. Ross assumes no prior knowledge of probability and covers all the necessary preliminaries simply and clearly. He explains the concept of arbitrage with many examples, and then uses the arbitrage theorem, along with an approximation of geometric Brownian motion, to obtain a simple derivation of the Black-Scholes formula. No other book presents such sophisticated topics in a mathematically accurate but accessible way.

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