Description: The Mathematics of Finance: Modeling and Hedging explains the process of computing derivative prices in terms of underlying equity prices, while at the same time provides readers with the mathematical tools and techniques to carry out that process. The authors help readers understand the process, develop insights into how derivatives are used, and comprehend the risk associated with creating or trading these assets. These insights into derivative trading provide extra knowledge of how modern equity markets work.
-- The mathematics of two financial concepts that have had a major impact of the way the financial industry views derivative trading is emphasized throughout. One concept emphasized is investments that replicate equities. The other is the mathematical model of equities when arbitrage opportunities are ruled out.
-- A chapter on using spreadsheets to compute European, American, A-Barrier Option Trees, and N-Step Trees has been included.

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