Hull has long been the standard introduction to financial engineering. I doubt there is a trading floor in the world that doesn't have a copy, worn and dog-eared, passed from one trading station to the next.

The book opens with introductory chapters on futures, forwards, interest rates and swaps. Practical issues like day counts are covered only briefly, and continuous compounding is used throughout. This is theoretically convenient, but may frustrate practitioners. Chapters on options markets and options trading lead to binomial pricing and then the Black-Scholes formulation. Covering binomial pricing before Black-Scholes builds intuition, but it forces some "hand waving" on risk neutral valuation. This is a problem with all books that take the same approach. Hull handles the transition better than others. The discussion of options finishes up with a chapter on pricing options on futures, currencies and indexes and another chapter on the Greeks and delta hedging.

Next, there are stand-alone chapters on value-at-risk, estimating volatilities and correlations, numerical procedures for valuing derivatives, volatility smiles, exotic options, and pricing with martingales. There are three chapters on pricing fixed income derivatives. These cover standard analytic solutions such as Black's (1976) model applied to caps and floors. They also cover yield curve models up to HJM. The book closes with a chapter covering selected topics on credit risk.