Introduction

The world is the excess of possible.1

The aim of this book is to present the quantitative aspects of financial markets instruments and their derivatives. With such a broad scope, it goes without saying that it remains a “general” book, which is why, at the end of each of the chapters, there is a list of further reading for those who want to expand the topic (this also applies at a global level, cf. the end of this Introduction). Ideally, everyone concerned with financial markets – whether a trader, a risk manager, a sales person, an accountant, or managing a fund, an institutional or a bank, and so on, or else a student in finance, of course – should have to be aware of what is happening, quantitatively speaking, behind the financial instruments' behaviors.

In writing this book, my concern was twofold: to sort out what really needs to be mastered, and to write up the text in the most pedagogical way. I hope that with both my 25-year professional experience in financial markets and my teaching activities, this objective will have been reached in a satisfactory way.

As regards the mathematical formulae, they are not proved, except when the proof brings some useful insight. Rather, I have tried to justify as much as possible their importance, and to translate them from algebra into plain English. After all, the vast majority of people involved with financial markets do not compute prices, sensitivities, and so on since they have access to data providers such as Bloomberg, ...

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