Nelson Higher Education

Higher Education

Introduction to Derivatives and Risk Management, 10th Edition

  • Don M. Chance
  • Robert Brooks
  • ISBN-10: 130510496X
  • ISBN-13: 9781305104969
  • 640 Pages | Hardcover
  • Previous Editions: 2013, 2010, 2007
  • COPYRIGHT: 2016 Published
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About the Product

Coupling real business examples with minimal technical mathematics, market-leading INTRODUCTION TO DERIVATIVES AND RISK MANAGEMENT, 10e blends institutional material, theory, and practical applications to give students a solid understanding of how derivatives are used to manage the risks of financial decisions. It delivers detailed coverage of options, futures, forwards, swaps, and risk management as well as a balanced introduction to pricing, trading, and strategy. The financial information throughout the Tenth Edition reflects the most recent changes in the derivatives market--one of the most volatile sectors in the financial world. New "Taking Risk in Life" features illustrate the application of risk management in real-world financial decisions.The Tenth Edition also includes Cengage Learning Testing Powered by Cognero, a flexible, online testing resource that gives instructors limitless testing possibilities.


  • UP-TO-THE-MINUTE ARTICLES AND READINGS REFLECT EMERGING ISSUES AND CHANGES: The latest updates, articles and suggested readings at the end of each chapter keep you and your students at the forefront of the many challenges and changes throughout the market. Internet-related information and the book's companion website further ensure the material you present is the most current.

  • "MAKING THE CONNECTION" BOXES DEMONSTRATE FINANCIAL DECISION-MAKING IN ACTION: Now you can give your students insights into how chapter content applies directly to real-world financial decision-making. Engaging "Making the Connection" boxes highlight examples from real businesses and actual market conditions to emphasize the practicality of chapter theories.

  • "CONCEPT CHECKS" ENSURE STUDENT COMPREHENSION: The "Concept Checks" questions at the end of each chapter help students understand the basic materials covered in the text. Solutions to these questions at the end of the book allow students to check their own comprehension.

  • EXTENSIVE ILLUSTRATIONS CLARIFY CONCEPTS: A wealth of captivating, useful illustrations--including more than 100 figures and more than 100 tables--further expand upon and reinforce the concepts presented in the text. Figures build on each other to illustrate links between stocks, risk-free bonds, futures, options, forwards, Black-Scholes call/put pricing, and similar concepts.

  • MINIMAL USE OF TECHNICAL MATHEMATICS KEEPS BOOK ACCESSIBLE FOR STUDENTS: While the topic of financial derivatives is unavoidably a technical subject, the authors do not emphasize calculus that is not necessary for learning material at this level. The text uses a flexible mathematical approach that places more complex material in end-of-chapter appendices--all while keeping the text challenging and applicable to today's needs.

  • PROVEN END-OF-CHAPTER PRACTICE AND NEW TEST BANK PROBLEMS IMPROVE UNDERSTANDING: A variety of end-of-chapter problems offer focused opportunities for students to apply the concepts they've learned. New Test Bank problems provide additional choices to easily check your students' comprehension.

About the Author

Don M. Chance

Don M. Chance, Ph.D., CFA, holds the James C. Flores Endowed Chair of MBA Studies and is Professor of Finance at the E.J. Ourso College of Business at Louisiana State University. He previously held the William H. Wright, Jr. Endowed Chair for Financial Services at LSU, and the First Union Professorship in Financial Risk Management at Virginia Tech. Prior to his academic career, he worked for a large southeastern bank. He has been a visiting scholar at the University of Adelaide (Australia), the University of Strathclyde (Scotland), the University of North Carolina at Chapel Hill, the Korea Advanced Institute for Science and Technology, and the University of Missouri at Kansas City. Dr. Chance is widely published in derivatives and risk management, as well as other areas of finance. He has published numerous articles in academic and practitioner journals and is the author of ESSAYS IN DERIVATIVES: RISK TRANSFER TOOLS AND TOPICS MADE EASY, 2e, and ANALYSIS OF DERIVATIVES FOR THE CFA PROGRAM. He has extensive experience conducting professional training programs, and his consulting practice (Omega Risk Advisors, LLC) serves companies, organizations, and law firms. Dr. Chance is also involved in the development and writing of the derivatives curriculum in the CFA program.

Robert Brooks

Robert Brooks is the Wallace D. Malone, Jr. Endowed Chair of Financial Management at The University of Alabama; president of derivatives consulting firm Financial Risk Management, LLC (; and founding partner of money management firm BlueCreek Investment Partners, LLC ( The author of numerous articles appearing in both academic and practitioner journals, Dr. Brooks has been quoted in THE WALL STREET JOURNAL, THE NEW YORK TIMES, BLOOMBERG NEWS, and THE BOND BUYER, as well as regional newspapers. He is the author of several books, including BUILDING FINANCIAL RISK MANAGEMENT APPLICATIONS WITH C++. Dr. Brooks has testified in a subcommittee hearing of the U.S. House of Representatives in Washington, D.C., as well as in a field hearing of the Securities and Exchange Commission in Birmingham, Alabama. He also has consulted with money managers, major public utilities, energy companies, auditing firms, corporations, investment bankers, elected municipal officials, and commercial bankers. In addition, Dr. Brooks conducts professional development seminars on various aspects of finance. He earned his B.S. in finance from Florida State University and his Ph.D. in finance from the University of Florida.

Table of Contents

1. Introduction.
2. Derivatives Markets.
3. Principles of Options Pricing.
4. Option Pricing Models: The Binomial Model.
5. Option Pricing Models: The Black-Scholes-Merton Model.
6. Basic Option Strategies.
7. Advanced Option Strategies.
8. Principles of Pricing Forwards, Futures, and Options on Futures.
9. Futures Arbitrage Strategies.
10. Hedging.
11. Swaps.
12. Interest Rate Forwards and Options.
13. Advanced Derivatives and Strategies.
14. Financial Risk Management Techniques and Applications.
15. Managing Risk.
Appendix A: List of Important Formulas.
Appendix B: References.
Appendix C: Solutions to Concepts.

New to this edition

  • NEW! "Taking Risk in Life" features appear in selected chapters and present real-life situations illustrating the application of risk management in financial decisions.
  • REVISED! The Tenth Edition has been thoroughly updated throughout to reflect numerous recent changes in the options markets and futures markets. It includes a new and completely revised chapter 2: Derivatives Markets.
  • NEW! Providing the ultimate testing resource, Cengage Learning Testing Powered by Cognero is a flexible, online system that allows you to author, edit, and manage test bank content from multiple Cengage Learning solutions; create various test versions in an instant; and deliver tests from your LMS, your classroom, or wherever you want. The Cognero Test Bank content is tagged according to Tier I (Business Program Interdisciplinary Learning Outcomes) and Tier II (Finance-specific) standards, topic, Bloom's Taxonomy, and difficulty level.


All supplements have been updated in coordination with the Main title.
Please see Main title page for new to this edition information.

Instructor Supplements

Website  (ISBN-10: 1305104986 | ISBN-13: 9781305104983)

Put all the instruction tools you need at your fingertips. The website includes Microsoft® Word versions of the Solutions Review Manual and Test Bank, PowerPoint® lecture slides, and access to the Cognero Test Bank. Approximately 25 PowerPoint® slides per chapter highlight tables and figures with useful hyperlinks that allow you to jump to the table or figure and back again without breaking the flow of your lecture. The online Solutions Review Manual gives your students a useful online review tool, providing answers to the end-of-chapter problems, as well as the step-by-step solutions, so students can check their own work and determine exactly where they may have made errors. The Test Bank questions help you evaluate your students' understanding of text concepts. You'll find a variety of more than 300 questions within this proven Test Bank. The companion site also has useful Web links, author-provided spreadsheets, errata updates, and Technical Notes that clearly show students how numerous formulas and measures of various kinds of risk are derived.

Cengage Testing, powered by Cognero® Instant Access  (ISBN-10: 1305269020 | ISBN-13: 9781305269026)

Accessible from the instructor companion site, Cengage Learning Testing Powered by Cognero is a flexible, online system that allows you to author, edit, and manage test bank content from multiple Cengage Learning solutions; create multiple test versions in an instant; and deliver tests from your LMS, your classroom, or wherever you want. The Cognero Test Bank content is tagged according to Tier I (Business Program Interdisciplinary Learning Outcomes) and Tier II (Finance-specific) standards, topic, Bloom's Taxonomy, and difficulty level.