A rigorous introduction to financial derivatives focused on their use for hedging/risk management, establishing trades to reflect market outlooks and a means to create leverage. Students will learn theoretical underpinnings of derivative products and understand advantages and pitfalls they offer for traders and hedgers. Topics include: basics of bond and swap valuation, difference and overlap of forwards and futures, use and pricing of basic and exotic options, Black-Scholes-Merton formula, Value-at-Risk (VAR). Emphasis on markets-based implementation of technical material and real world examples of market disruption. Recommended prerequisite: Economics 608D or equivalent; multivariable calculus.