Description: (Formerly numbered Management 237D.) Lecture, three hours. Limited to Master of Financial Engineering program students. Introduction to derivative markets and basic concepts, models, analyses. and technical tools of quantitative finance used in these markets. Derivatives are both exchange traded and over-counter securities. Derivative markets are world's largest and most liquid. Organization and role of put and call option markets, futures and forward markets, and their interrelations, with emphasis on arbitrage relations, valuation, and hedging with derivatives. Implementation of derivatives trading strategies, perspective of corporate securities as derivatives, functions of derivatives in securities markets, and recent innovations in derivative markets. S/U or letter grading.