The late 20th century has seen an increase in the development of financial instruments, many of which have been off-balance-sheet activities. These instruments have become increasingly complex placing a higher demand on both the purchasers and the creators of such instruments. The risks involved and the penalties paid by those who have not adequately understood these products are all too well known. This text discusses in detail, through a blend of theory and empirical research, the modelling of financial instruments and examines the instruments that have been created over the past 20 years. The book focuses on the principles behind developing financial instruments and how the process can be modelled.