This fifth edition has been extensively revised to address the most recent developments in this rapidly evolving field. New and updated information reflects current conditions in a variety of areas, including electronic trading platforms, globalization of markets, hedge funds, financial scandals involving derivatives, and government regulation. Also new to this edition are text boxes containing anecdotes or vignettes related to topics discussed more formally in the text, and product profiles to describe some of the more successful contracts around the world and to highlight innovative or unusual features of traded contracts. The treatment in this text emphasizes financial derivatives, but it does not neglect traditional commodity futures.
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What I particularly like is the careful way the text builds up the material in a simple style without skipping any steps. This incremental approach makes it a very useful teaching resource. The book clearly knows what it is trying to do and makes no assumption about the knowledge level of the reader. I also like the way material is presented through the use of concrete examples. I was also lucky enough to have one of the authors as my professor.
Though I highly recommend previous coursework in Derivatives, this book will also introduce basic fundamentals of Derivatives. This book was a core reading for one of the CFA Chartered Financial Analyst examinations when I took such examinations a number of years ago Robert Kolb does a good job covering the subject matter from the perspective of how to accomplish something with a future, option or swap.
For those readers with an interest in learning more about futures, options and swaps, this is a good source of information. This is unfair, and for most undergraduate and MBA students who are not destined for derivatives dealing desks, and even many who are, Kolb is the better volume. Critics of Hull frequently cite that he is dry and technical to the point of somnolence. For Wilmott the opposite is the case. Critics hold his tone is flippant and that he glosses over major dimensions.
My own view is these harsh reactions to these fine authors are exaggerations, but do have some evidence to support their expression. Kolb does not gloss over or ignore difficult topics, and his style is never pedantic or superficial. This text does, however, contain any number of horrible errors and editing snafus that frustrate the reader. The errata sheet from the publisher does little to ameliorate the pain from these howlers. One wonders how a book can contain so many errors in such a competitive field.
I particularly recommend Kolb over Hull and Wilmott for those students whose background is not mathematics, engineering, or hard sciences. While the book is technical, it is not written in near-code geek speak. For my MBA students who are "poets" rather than "rocket scientists" Kolb wins as hands down favorite. Hull remains excellent for experts, PhD students, technicians, and pricing specialists, however, Kolb certainly deserves wider respect and use by the majority of students of derivatives.
In short, while flawed, Kolb is an excellent and accessible work. This book was so badly edited that it was distracting - figures in tables not matching figures in the text, some calculations just plain wrong, and everything covered at a very superficial level. This had the potential to bridge the gap between a Hull-type presentation and an undergrad-type. Sadly, this book really disappoints. I especially liked the part on swaps with many examples like flavoured swaps or equity swaps.
I feel the Dr. He also includes advanced formulas in the latter part of the book if you want to get deeper. Certain other authors of finance and accounting texts seem more interested in impressing their readers with their acumen in the field. It is very plain and straightforward.
If only more academics would write in this manner. My main problem with this book is I found it so interesting I wandered off the required reading sections for the CFA test too much.
Futures, Options, and Swaps, 5th Edition
Futures, Options, and Swaps