Financial Mathematics and Engineering

This textbook on the basics of option pricing is accessible to readers with limited mathematical training. It is for both professional traders and undergraduates studying the basics of finance. Assuming no prior knowledge of probability.

This book explains portfolio modelling in financial mathematics as a consistent mathematical theory with all steps justified. The topics include mean-variance portfolio analysis and capital market theory. The book contains many examples with solutions. Linear algebra rather than calculus is used as foundation for portfolio analysis; this approach is more conceptual and helps to avoid tedious calculations.

Applied Quantitative Finance presents solutions, theoretical developments and method proliferation for many practical problems in quantitative finance. The combination of practice and theory supported by computational tools is reflected in the selection of topics as well as in a finely tuned balance of scientific contributions on the practical implementation and theoretical concepts. This concept offers theoreticians insight into the applicability of the methodology and, vice versa, practitioners insight into new methods for their applications. The e-book design of the text links theory and computational tools in an innovative way. All Quantlets for the calculation of the given examples in the text are supported by the academic edition of XploRe. The electronic edition of the book enables one to execute and modify all quantlets immediately.

This book provides an understanding of the mathematical propositions necessary for comprehensively following the fundamentals of economic theory. These mathematical tools help the student to define terms precisely and apply them to real world situations and also to the needs of economics like problems of decision making, inflation, forecast, and risk.