This textbook is an outgrowth of my course package for ACTS:4380 Mathematics of Finance II offered at the University of Iowa for advanced undergraduate and first-year graduate students in actuarial science. It is a solid attempt to demystify concepts in derivative pricing with a focus on ideas and reasoning. You will get to understand what lies behind different pricing procedures instead of slavishly plugging numbers in "mysterious" pricing formulas. Full of exam-type examples and problems with worked out solutions, it is an ideal study aid for anyone preparing for the derivatives portion of Exam IFM (Investment and Financial Markets) of the Society of Actuaries.
Orders can be made from the publisher or from Amazon. For instructors adopting the book as a required text, a solutions manual for all even-numbered problems in the book is available.
Preface: [PDF]
Table of Contents: [PDF]
Errata (dated June 13, 2019): [PDF]
Please do not hesitate to contact me (email: amblo201011@gmail.com) if you have any questions about the book. I will try my best to get back to you ASAP.