Stochastic Calculus for Finance I: The Binomial Asset Pricing Model

Great book. The examples are very easy to follow.

I have only covered about half of the first book, so far. While the content is very clear, most of the mathematical concepts are not explained properly. One needs to have at least Master degree (in mathematics) equivalent knowledge to understand all the reasoning behind the definitions given. While it might not be needed for most people, knowing the background knowledge will be very helpful to anyone reading it. On other hand the concepts of finance is also assumed, so this should not be the first book one should pick up to learn mathematical finance.What I found most irritating is that, the book is written as lecture notes, which only make sense with some background material, which is not mentioned in the text. I keep looking for bibliography or references, which are absent.

I wish it described in more details it's steps but if you spend more time on it, you'll understand it well.

Extremely gud

This is absolutely one of the best textbooks I have used in university.The book provides a well laid-out introduction to financial mathematics. Volume I begins by focusing on the binomial asset pricing model. This model is discussed in discrete time and introduces many fundamental concepts including no-arbitrage, martingales, and Markov processes. Volume I shows how various European and American options can be modelled using probability theory. It also discusses is the change of measure between risk-neutral and actual probabilities using the Radon-Nikodym derivative. Later in Volume I, ideas including the principle for random walk, exotic options, and random interest rates are explored. Volume II looks at many of the same concepts as Volume I, using continuous-time, in addition to introducing numerous other concepts.What distinguishes this textbook from many others is the clarity it provides. While many textbooks contain text and pictures that are irrelevant to learning, this textbook is terse and allows concepts to be understood easily. Each chapter concludes with a concise summary and a wealth of exercises that require the reader's serious thought about the chapter's contents. Volume I and II, both contain enough content each to cover an entire upper year undergraduate mathematics course.The writing in the textbook is very concise and provides ideas in a straightforward manner, which is crucial when time is limited. I highly recommend this textbook looking for an introduction to financial mathematics. I look forward to reading the second book.