John C. Hull. Prentice Hall International. $94, hardcover.

The fourth edition of Options, Futures, & Other Derivatives comes two years after the third, and offers an excellent extension of the material familiar from earlier editions.

Additional material includes new chapters on value-at-risk, volatility and correlation estimation (including Arch/Garch models), equilibrium and no-arbitrage models, and the HJM and BGM models. The volume also includes additional material on interest rates (including zero-coupon rates) and volatility smiles/skews; extensively revised material on interest rate term-structure models; and a more-detailed discussion of the use of the Black model to price bond options, caps, floors and swaptions. The material on credit risk has also been overhauled in line with market developments.

Some cosmetic changes, such as improved sequencing of the material and clearer notation, have also made the book easier to use. A disk with Excel spreadsheets should also assist readers in working through some of the pricing approaches within a simple framework. This book is perhaps the most-used reference work on derivatives valuation. Its only serious competitors are Paul Wilmott's Derivatives and Eric Briys et al's Options Futures and Exotic Derivatives. The fourth edition of Options, Futures, & Other Derivatives is primed, nonetheless, to maintain its status and reputation as an indispensable part of the library of all derivatives and risk management practitioners and students.

REPO: The Ultimate Guide.

Daniel Corrigan, Christopher Georgiou and Jonathan Gollow. Pearls of Wisdom Publishing. $125, hardcover (available at www.repobook.com).

The domestic and international repo markets are vital to the capital markets. The role of repos in financing positions, leveraging positions and short-selling, as well as in enhancing returns, can't be underestimated.

REPO: The Ultimate Guide is the successor to a previous publication by these authors—NatWest Markets Handbook of International Repo—and provides a valuable overview of the repo markets. The major topics covered in the book, which is sponsored by Cedelbank and Freshfields, include the structure of transactions; the functioning of repo markets; market conventions; netting and clearing; risk management; and accounting, tax and legal aspects of repo transactions. The book also includes a detailed glossary and a copy of the PSA/ISMA Global Master Repurchase Agreement. The absence of an index is a minor shortcoming, but given the compact size of the book (around 200 pages), it's not a serious flaw. 3