Mastering Derivatives: A Comprehensive Workbook with 50 Exercises and Solutions: Options, Futures, and Swaps for Advanced Finance Students, MBA Candidates, FRM/CFA Professionals, and Practitioners

Mastering Derivatives: A Comprehensive Workbook with 50 Exercises and Solutions

Unlock the power of options, futures, and swaps with the ultimate hands-on guide for finance professionals.

In the high-stakes world of global finance, theoretical knowledge is not enough. To truly master derivatives—the instruments that drive trillions in market activity—you need practical, applicable skills. Mastering Derivatives is your essential companion, meticulously designed to bridge the gap between textbook concepts and real-world trading, risk management, and portfolio strategies.

Whether you are an MBA candidate, a finance student, a FRM/CFA candidate, or a seasoned practitioner, this workbook provides a rigorous, exercise-driven curriculum that will sharpen your analytical abilities and deepen your market intuition.

This comprehensive workbook guides you through the entire derivatives landscape, from foundational principles to advanced applications. Each of the 50 carefully crafted exercises mirrors the challenges you’ll face in the classroom and on the trading floor.

• Part 1: Futures & Forwards (Exercises 1-15): Master the core mechanics of pricing and arbitrage. You’ll tackle the cost-of-carry model, identify cash-and-carry opportunities, and execute complex strategies like minimum variance hedging, tailing the hedge, stack-and-roll, and analyzing calendar spreads on commodities like crude oil and natural gas. Learn to price FRAs and identify the cheapest-to-deliver bond for Treasury futures.

• Part 2: Options (Exercises 16-40): Dive deep into the world of puts and calls. You’ll apply put-call parity to uncover arbitrage, build synthetic positions, and calculate fair prices using single/multi-period binomial trees and the Black-Scholes model. Develop a trader’s toolkit by analyzing the Greeks—Delta, Gamma, Theta, Vega—and constructing sophisticated strategies, including vertical spreads, straddles, iron condors, collars, and portfolio insurance using index options.

• Part 3: Swaps (Exercises 41-50): Navigate the over-the-counter (OTC) market with confidence. Learn to price and value plain vanilla interest rate swaps, structure deals using comparative advantage, and manage currency exposure with cross-currency swaps. The exercises also cover total return equity swaps, commodity swaps, and the valuation of swaptions.

• Advanced Applications: Go beyond individual instruments to understand how derivatives fit into a broader portfolio context. This section includes deep dives into Value at Risk (VaR), stress testing, regulatory capital (Basel III, EMIR), and three real-world case studies, including the design of a corporate airline hedging program and a tail-risk protection strategy for a multi-billion-dollar pension fund.

Key Features for Your Success:

• 50 Real-World Exercises: Based on actual market scenarios and data, ensuring you learn by doing.

• Detailed, Step-by-Step Solutions: Every exercise includes a complete solution, demystifying the calculations and logic behind the answer.

• Quick-Reference Appendices: Access essential formulas, mathematical foundations (Ito’s Lemma, lognormal distribution), market conventions (day counts), and Excel implementation tips to streamline your work.

• Modern Market Context: Covers critical contemporary topics, including the transition from LIBOR to SOFR and the rise of cryptocurrency derivatives.

Stop just learning about derivatives—start mastering them. Add Mastering Derivatives to your cart today and gain the practical expertise to excel in the world of modern finance.