The Professional Risk Managers Guide to Finance Theory and Application: Basic Principles of Options Pricing

The following is a chapter from The Professional Risk Managers' Guide to Finance Theory and Application , a complete reference for managing risk in all areas of finance, from insurance and banking to asset management and institutional investing. Ten experts from around the world discuss every aspect of finance theory and how it is intertwined with the process of risk management. This reference delivers a comprehensive introduction to portfolio mathematics that includes discussion of the efficient frontier, portfolio theory, and the concept of portfolio diversification.