Focuses on discrete-time derivative pricing and presents the necessary foundations in economics, probability theory, and stochastic processes to price assets. Focuses primarily on stochastic processes and stochastic calculus theory. Includes a general review of asset classes, derivatives, interest-rate instruments, preferences, and exposure to the fundamentals of probability theory necessary to understand stochastic processes. Emphasizes the use of binomial trees to price derivatives under the risk-neutral measure, generalizing the results to a continuous-time setting. Introduces the concept of equilibrium and no-arbitrage and their use for asset pricing.