NOTE: par. 0 means the continuation of a paragraph from the previous page; par. 1 is the first full paragraph on a page.
I. CORRECTIONS FOR EQUATIONS
Ch. 2, p. 38, Eq. 2-2: "Beginning Index" should be in the numerator
Ch. 4, p. 120, Eq. 4-4: Some find it easier to separate the eq. into two parts where (1) ... < PF and (2) PF < ...
Ch. 11, p. 318, Eq. 11-9: should add "where K1 < K2"
Ch. 13, p. 370, last line: "Eq. 12-2 and 12-3" should be "Eq. 12-7 and 12-8"
Ch. 13, p. 378, Eq. 13-7: Rf should be RF
App. 14A, p. 443, Eq. 14A-9: Eliminate the ")" after t
Eq. 14A-5 and Eq. 14A-6: 2_/2_ should be 2_/PS2
Ch. 16, p. 506, Eq. 16-7: at end of eq. "PS" should be "PP"
II. CORRECTIONS TO THE PROBLEMS AT THE END OF THE CHAPTERS
App 1A, p. 33, problem 1A-3, line 4: "data" should be "date"
App. 2A, p. 71, problem 2A-1: profit/loss for each separately
Ch. 9, p. 270, Problem 9-10: the cheapest bond does NOT change.
Ch. 12, p. 357, Problem 12-5: also find the price of the call option.
III. CHANGES TO FIGURES, EXHIBITS, EXAMPLES, ETC.
NOTE: S&P500 futures now has a multiple of 250 (was 500, as used in the book): the MMI contract no longer trades - but there is the Dow Jones futures (similar contract)
Ch. 1, p. 7, Fig. 1-1: legend should say "NYSE commons stock average daily volume"
Ch. 2, p. 49, Exhib 2-4:
T-bonds settle: change from 102-90 to 102-09
5 year Notes: can make Mar open 105-245; June settle 104-165
2 year Notes: settle 104-205
Munis: instead of yield it should be Lifetime High and Low
second section: Interest Rate as head of two column section; put "settle" where "rate" is.
T-bills: June low 96.07
Ch. 3, p. 94, Ex. 3-2, Section B: "return on margin deposit .." should be 907%, not 741% (also at end par. 1)
Ch. 3, p. 96, Ex. 3-4: price difference should be % (may also occur in other bond examples)
Ch. 4, p. 126, Ex. 4-1, eq. 4-7: should have a "-1" at end of equation.
Ch. 4, p. 129, Fig. 4-6: "r x [a,b]" should be "r*[a,b]"
Ch. 6, p. 170, Ex. 6-4, 3 lines from the bottom: "given by the futures" should be "given by the cash"
Ch. 7, p. 188, Fig. 7-1: I3 should also be a dashed line
Ch. 7, p. 189, Fig. 7-2: slope is actually Y/X = (PC)/(PF)
Ch. 7, p. 193, Ex. 7-1, b* calculation, 2d line: 6.62 should be 6.65
Ch. 8, p. 222, Ex. 8-2, at bottom (last line): after = sign it should read "$300"
Ch. 9, p. 253, Table 9-3, last column, line 6 of numbers: 0.330 should be 0.033
Ch. 10, p. 283, Fig. 10-3, Y axis and legend: D1 should be P1
Also, p. 284, line 1: D1 should be P1
Ch. 11, p. 317, Exhib. 11-6, second bold line: "The Call is" should be "The Put is"
Ch. 11, p. 318, Fig. 11-3: short stock (short sale) line should go through K
Ch. 12, p. 333, Table 12-1: "American calls" column, "Effect of time" row, PP should be PC
Ch. 12, p. 336, Ex. 12-1, Rate of return section: 103.4% should be 148.3%.
Also: 2nd par in Ex.: "One could ... 674%" should be 967%
Ch. 12, p. 341, Ex. 12-2, line 2: "October 13" should be "October 15"
Ch. 13, p. 384, Ex. 13-4, Section D: actually the number of days should be 12 (not 11)
Ch. 13, p. 398, Ex. 13-8, line 6: need to add PP = 6 3/8
Ch. 15, p 474, Fig. 15-16, legend: "strike prices = 90 and 100" should be " ... 90 and 110"
Ch. 16, p. 491, Ex. 16-1, line 3: "Sell July 70" should be "Sell July 50"
Ch. 16, p. 492, Ex. 16-2, next to last line: 100 - 1 ½ should be 98 - 1 ½
last line: 10.3% should be 10.5%
Ch. 19, p. 588, Ex. 19-1 line 10: "T= 80/360" should be "T = 80 days, therefore 80/360 = .2222"
6 lines from the bottom: d2 = -.04543 should be + .0454
5 lines from the bottom: +.04543 - .11704 should be +.0454 - .1170
last line: .4722 should be .4715
Therefore, on p. 589: .4733 should be .4715
and .28583 should be .28540
and $.0273 should be .0277 or 2.77 cents
Ch. 19, p. 589, Table 19-1, 1st line: PC should be PS
also in Table 19-1, 1st panel, last line (the 9% line): last number: 9.49 should be 8.49
IV. CONFUSING STATEMENTS
Ch. 1, p. 10, line 8: "1 million yen" should be "10 million yen"
Ch. 1, p. 13, par. 3, line 4-5: "price gains in the option ..."; the idea is that a option price gains depend on cash asset price gains (not just a price change of any direction). Thus, change sentence to: "Thus, a large price gain in the option depends primarily on a large price increase in the underlying cash asset, while the maximum loss in the option is limited to the option's initial cost."
Ch. 3, p. 107, top: the cash market prices need to have a ":" not a "-"
Ch. 4, p. 113, par. 3, line 2: "net short speculators" should be "net short hedgers"
Ch. 5, p. 152, par. 2, line 2: "negative" should be "positive" (then - cov will be negative)
Ch. 11, p. 315, last line: "102 5/8" should be "102"
Ch. 11, p. 316, par. 2, last 3 lines: should be "... put option prices are greater for higher strike prices, while call option prices are less for higher strike prices."
Ch. 11, p. 319, second sentence: "The dashed line ..." should be "The solid line..."
Ch. 11, p. 319, par. 0, line 7: "124 1/4" should be "93 1/2"
Ch. 11, p. 321, par. 4, line 2: "between $50" should be "$25"
Ch. 11, p. 351, par. 2 line 4: "sells the stock short," should be eliminated.
Ch. 12, p.334, par. 3, line 2: "Deep-in-the-money option" should be "Deep-in-the-money call option"; similarly, line 4 should be "call option"
App. 14A, p. 443: Elasticity (leverage) should be
Ch. 18, p. 552, par. 1, line 7: "take a long position in the futures ..." should be "take a short position in the futures"
V. CHANGES TO NOTES
p. 62 under "The Hedge Ratio," line 4: "deep" should be "keep"
VI. MINOR CHANGES
p. vi: first line: (p.) 118 should be (p.) 122
p. vii: Ch. 7: "Naive Hedge Ratos" should be "Ratios"
p. ix: before Chapter 11 there should be "Part III: Options Markets: Concepts and Uses"
p. xiii: before Chapter 17 there should be "Part IV: Applications and Advanced Options Topics"
Ch. 1, p. 16 par. 1, line 2: "reducng" should be "reducing"; "positiion" should be "position"
Ch. 2, p. 35, line 2: "who" should be "how"
App. 2A, p. 66, par. 1, line 6: "anks" should be "banks"
App. 2B, p. 77, line 8: "or LIFFE" should be "on LIFFE"
Ch. 4, p. 119, Focus 4-1, Section "Potato Default", line 4: "50 million potatoes" should be "50 million pounds of potatoes.
Ch. 5, p. 143, Focus 5-2, Section "Front running", line 2: "The brokder traders" should be "trades"
Ch. 6 p. 166, line 10: "costsly" should be "costly"
Ch. 6, p. 176, par. 1, line 4: "infustion" should be "infusion"
Ch. 7, p. 188, Fig. 7-1, title "In difference" should be "Indifference"
Ch. 8, p. 234, Kleidon ref: "Standord" should be "Stanford"
Ch. 11, p. 322, par. 2, line 1: "idex" should be "index"
Ch. 11, p. 347, par. 1, line 3: "option value expiration" should be "option value at expiration"
Ch. 14, p. 441, ref: "Huag" should be "Haug"
Ch. 16, p. 494, line 2: "for in-the-money" should be "or in-the-money"
Ch. 17, p. 522, Ex. 17-2, table, first line: "T-bill yeild" should be "yield"
Ch. 18, p. 555, Eurodollar section: should be $1 million