1. Background material -- 2. Simple economics: complete and incomplete markets -- 3. Investment portfolio optimization -- 4. Pricing: neutral and indifferences -- 5. Hedging -- 6. Equity valuation and investing: continuous-time accounting -- 7. FX rates and FX derivatives

We establish general theory of foreign exchange derivatives (FXD), for multidimensional, possibly incomplete, Itô SDE market/econometric models. The established theory is consistent with the one of foreign exchange rates (FXR) introduced by the author in a previous note. A very simple example...

Given the explosion of interest in mathematical methods for solving problems in finance and trading, a great deal of research and development is taking place in universities, large brokerage firms, and in the supporting trading software industry. Mathematical advances have been made both...