This is a formal introduction to financial engineering that uses a definition-theorem-proof format. Interestingly, the book uses only elementary mathematics, making it accessible to second or third year university students. For the most part, the authors employ just pre-calculus and basic probability theory. Almost all concepts are presented in discrete time. Only later in the book is a small amount of calculus and linear algebra used. Given these basic tools, it is surprising how high a level of sophistication the authors achieve, covering such topics as arbitrage-free valuation, binomial trees, and risk-neutral valuation.

Despite its elementary nature, the book is mathematically VERY formal. This is excellent for clarifying definitions. Notions such as arbitrage or admissible portfolio are indicated with mathematical precision. The result is mathematically elegant and will appeal to students who have a degree of mathematical sophistication.

A shortcoming of this approach is that markets are treated in a stylized manner. For the most part, risky assets are "stocks" and risk-free assets are "bonds." Notions such as day count conventions, bid-ask spreads, repo rates or swaps receive no mention. Inputs such as volatilities are simply provided. No consideration is given as to where they come from. The notion of implied volatilities doesn't arise.