Transcription of A Tutorial Introduction to Financial Engineering
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A Tutorial Introduction to Financial Engineering M. Vidyasagar Tata Consultancy Services Ltd. No. 1, Software Units Layout, Madhapur Hyderabad 500081, INDIA. Abstract In this paper we give a brief, elementary Introduction to various aspects of Financial Engineering . Specific topics discussed include the determination of a fair price for an option or other derivative instrument, hedging strategies, etc. We also discuss what role, if any, Financial Engineering has played in the current Financial crisis. 1. 1 Introduction Buying and selling assets as a human activity has been going on since the dawn of civilization. Buying and selling (and thus speculating in) derivative instruments based on these assets is almost as old an activity. While banking as a formal, regulated activity is just a few hundred years old, there can be no doubt even ancient societies had their version of money lenders.
1 Introduction Buying and selling assets as a human activity has been going on since the dawn of civilization. Buying and selling (and thus speculating in) derivative instruments based on these assets
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