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Financial Risk Management and Derivative Instruments offers an introduction to the riskiness of stock markets and the application of derivative instruments in managing exposure to such risk. Structured in two parts, the first part offers an introduction to stock market and bond market risk as encountered by investors seeking investment growth. The second part of the text introduces the financial derivative instruments that provide for either a reduced exposure (hedging) or an increased exposure (speculation) to market risk. The fundamental aspects of the futures and options derivative markets and the tools of the Black-Scholes model are examined.
The text sets the topics in their global context, referencing financial shocks such as Brexit and the Covid-19 pandemic. An accessible writing style is supported by pedagogical features such as key insights boxes, progressive illustrative examples and end-of-chapter tutorials. The book is supplemented by PowerPoint slides designed to assist presentation of the text material as well as providing a coherent summary of the lectures.
This textbook provides an ideal text for introductory courses to derivative instruments and financial risk management for either undergraduate, masters or MBA students.
List of contents
1. Stock Market Risk: Fundamentals and Behaviour; 2. Financial Leverage and Risk; 3. Bond Market Risk: Interest Rates; 4. The Nature of Growth; 5. Interest Rate Futures (Forwards); 6. Futures Contracts: Hedging/Speculating on Currency Risk; 7. Options Contracts: Hedging/Speculating on Currency Risk; 8. The Black-Scholes Model; 9. Trading Index Futures; 10. Option Strategies; 11. Option Pricing: The Greeks; 12. Derivative Instruments and the Global Financial Crisis (2007-08)
About the author
Michael Dempsey is Professor of Finance at Ton Duc Thang University in Ho Chi Minh City, Vietnam, having previously been Professor of Finance and Head of Finance at RMIT University, Melbourne, Australia.
Summary
Financial Risk Management and Derivative Instruments is an accessible, concise textbook offering a solid introduction to the essential principles of risk management and derivatives. Structured in two parts, the book first looks at markets and uncertainty, examining risk in the stock market and the bond market, leveraging and growth.
