When I saw a book on "Derivative Pricing" way back in 1999, it caught my attention immediately. I knew then derivative as limit of certain ratio of infinitesimals, rate of change of something, local property, etc. But what was derivative pricing? I knew certain pricing was based on intersection of demand and supply curves. I wondered if derivatives were used to find the intersection where one could achieve maximum pricing, and hence the name "derivative pricing". Better sense prevailed. I opened the book and read few pages. It opened the door to the world of modern quantitative finance.
But what are derivatives? Derivatives are financial instruments whose worth depends on the value of an underlying asset. You will soon read lots about derivatives in the context of Indian markets.
Here is a book Derivatives: The tools that changed finance by Phelim Boyle and Feidhlim Boyle, written in plain english to make concepts clear. You will not be able to solve Black-Scholes equations after reading this book. But you may appreciate why we have to solve them. The book is available for free download.
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