Understanding Financial Engineering is a hands-on introduction to all of the main financial Derivatives and their practical applications. The book bridges the gap between mathematical theory and practice with a focus on educating investors on how to use, value, and monitor derivative positions. The tutorials cover calculating present value of cashflows, futures, swaps, options, credit-default swaps, exotic options, CDO's, Binomial tree valuations, and Monte Carlo Simulations. All examples are available in a dynamic spreadsheet with macros and custom formulas Content: Introduction Chapter 1 - What are Derivatives? Section 1: Financial Calculation Basics Chapter 2- Time Value of Money Chapter 3 - The Yield Curve Section 2: Basic Derivative Instruments Chapter 4 - Futures and Forwards Chapter 5 - Swaps Chapter 6 - Options Chapter 7 - Credit Default Swaps Section 3: Exotic Derivative Instruments Chapter 8 - Binomial Lattices Chapter 9 - Monte Carlo Simulations Chapter 10 - Exotics, CDO's and Rainbows Section 4: Lessons Learned the Hard Way Chapter 11 - Derivative Disasters Conclusion