Options, swaps, futures, MBSs, CDOs, and other derivatives

All content in “Options, swaps, futures, MBSs, CDOs, and other derivatives”

Mortgage-backed securities

What started out as a creative way to spread risk ended up fueling a monster housing bubble. This tutorial explains what mortgage-backed securities are and how they work.

Black-Scholes formula

Options have been bought and sold for ages, but finding a rational way to price them seemed beyond our mathematical know-how... until 1973 when Fischer Black and Myron Scholes showed up and gave us the Black-Scholes model. This work was later extended by Robert Merton and now underpins much of modern finance.