The subject of the book is the model structure of a financial market and the assessment, valuation, and hedging of derivative financial contracts. From the perspective of application and valuation, standardized and the most important exotic options are addressed. The presentation includes models with discrete and continuous time and deals with stock price, exchange rate, and interest rate change risks. In addition to models with time-dependent volatility, log-normal models of the yield curve are discussed. A variety of illustrations and tables, as well as examples and exercises with solutions, are intended to deepen understanding and encourage self-study. The goal is to introduce the techniques and impart the skills necessary for the assessment and valuation of customized financial contracts.