The second edition of this successful and widely recognized textbook again focuses on discrete topics. The author recognizes two distinct paths of study and careers of actuarial science and financial engineering. This text can be very useful as a common core for both.
Therefore, there is substantial material on the theory of interest (the first half of the book), as well as the probabilistic background necessary for the study of portfolio optimization and derivative valuation (the second half).
The material in the first two chapters should go a long way toward helping students prepare for the Financial Mathematics (FM) actuarial exam. Also, the discrete material will reveal how beneficial it is to know more about loans in student-s personal financial lives.
The notable changes and updates to this edition are itemized in the Preface, however, overall, the presentation has been made more efficient. One example is the chapter on discrete probability, r
