Machine generated contents note: pt. I INVESTMENT BASICS -- ch. 1 The Investment Framework -- Chapter Objectives -- Introduction -- The General Financial and Economic Environment -- Definition of Investments -- The General Investment Environment -- Securities -- Classification of Securities -- Equity Securities -- Debt Securities -- Derivative Securities -- Types of Investors -- Financial Markets and Intermediaries -- The Roles of Financial Markets -- The Roles of Financial Intermediaries -- The Objectives and Constraints of Investors -- Objectives of Investors -- Constraints of Investors -- The Investment Management Process -- The Role of Investment Information -- Agency and Ethical Issues in Investing -- Asymmetric Information -- The Agent-Principal Problem -- Ethics in the Marketplace -- Social Responsibility -- So Why Study Investments? -- Chapter Summary -- The Plan of the Textbook -- Applying Economic Analysis -- International Focus -- Lessons of Our Times --

Contents note continued: Key Concepts -- Questions and Problems -- ch. 2 The Investment Decision Process and Investment Strategies -- Chapter Objectives -- Introduction -- The Investment Process -- The Risk-Return Trade-Off -- The Asset Allocation Step in the Investment Process -- The Security Selection Step in the Investment Process -- General Investment Philosophies and Strategies -- Some Prominent Investment Philosophies -- Harry Markowitz -- Paul Samuelson -- John Bogle -- Warren Buffett -- What Is Your Investment Philosophy? -- Some Investment Strategies -- Top-Down and Bottom-Up Approaches to Investing -- Active and Passive Investment Strategies -- Other Investment Strategies -- Dollar-Cost Averaging -- Margin Purchases and Short Sales -- Margin Purchases -- Short Sales -- Types of Markets and Orders -- Types of Trading Markets -- Direct Market -- Brokered Market -- Dealer Market -- Auction Market -- Types of Trading Orders -- Market Orders -- Limit Order --

Contents note continued: Finding the Equilibrium Price of a Share -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- ch. 3 Fundamentals of Risk and Return -- Chapter Objectives -- Introduction -- Measuring Return -- Holding Period Return -- Return over Multiple Periods -- Arithmetic Mean -- Geometric Mean -- The Effective Annual Rate -- Yield Definitions and Conventions -- Real Rate of Return -- Expected Rate of Return -- Measuring Risk -- Calculating the Risk of a Single Asset -- Required Returns and Risk Aversion -- Sources of Risk -- Risk and Investor Economic Decisions -- Utility and Risk Aversion -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- Appendix: A Brief Review of the Time Value of Money -- pt. II FINANCIAL MARKETS, INTERMEDIARIES, AND INSTRUMENTS --

Contents note continued: ch. 4 The Global Financial Environment -- Chapter Objectives -- Introduction -- The Functions of the Global Financial Market -- Economic Function -- Pricing Function -- Provision of Services -- Other Functions -- The Securities Exchanges -- US Organized Stock Exchanges -- US Over-the-Counter Securities Markets -- Some US Stock Market Indexes -- Some International Stock Exchanges -- The London Stock Exchange -- The Tokyo Stock Exchange -- The Prague Stock Exchange -- The Brazilian Stock Exchange -- The US Bond Market -- The International Bond Market -- Trading on the Exchanges -- Clearing Procedures -- Brokerage Services -- Trading Costs -- Automatic Trading Mechanisms -- Globalization and Regulatory Structure of International Stock Markets -- Globalization and Trends -- Investing Internationally and International Return -- Regulatory Structures in the US Exchanges -- Chapter Summary -- Applying Economic Analysis -- International Focus --

Contents note continued: Lessons of Our Times -- Key Concepts -- Questions and Problems -- Appendix: Calculating a Stock Market Index -- ch. 5 Money and Capital Market Instruments and Strategies -- Chapter Objectives -- Introduction -- The Money Market and Its Instruments -- The Money Market and Its Characteristics -- Money Market Instruments -- Nonmarketable Securities -- Marketable Securities -- Treasury Bill -- Commercial Paper -- Bankers' Acceptances -- Repurchase Agreements -- Federal Funds -- LIBOR -- Eurocurrency -- Yields and Spreads in Money Market Instruments -- The Capital Market and Its Instruments -- The Capital Market and Its Characteristics -- Fixed-Income Securities -- Government Bonds -- Municipal Securities -- Agency Bonds -- Corporate Bonds -- Yields and Spreads in Capital Market Instruments -- Equity Securities -- Derivative Securities -- Investment Risks in Financial Markets -- Some Investment Strategies -- Some Money Market Investment Strategies --

Contents note continued: Deposit and Liability Management Strategy -- Market-Neutral Strategy -- Pairs-Trading Strategy -- Some Capital Market Investment Strategies -- Enhanced Cash Management Strategy -- Top-Down and/or Bottom-Up Strategies -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- ch. 6 Investment Bankers and Investment Companies -- Chapter Objectives -- Introduction -- Investment Banking -- The Primary Market -- Shelf Registration -- The Investment Banker -- Initial Public Offering -- The Investment Companies Industry -- Functions of Investment Companies -- Types of Investment Companies -- Unit Investment Trust -- Closed-End Investment Companies -- Open-End Investment Companies -- Money Market Mutual Funds -- Equity Funds -- Bond Funds -- Index Funds -- International Funds -- Balanced Funds -- Asset Allocation Funds -- Fee Structure of Mutual Funds --

Contents note continued: Performance of the Mutual Fund Industry -- Other Types of Investment Companies -- Real Estate Investment Funds -- Hedge Funds -- Exchange-Traded Funds -- Some Strategies in Mutual Fund Investments -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- pt. III PORTFOLIO THEORY -- ch. 7 Diversification and Asset Allocation -- Chapter Objectives -- Introduction -- The Diversification Principle -- Types of Diversification -- Naive or Random Diversification -- International Diversification -- Efficient Diversification -- Covariance and Correlation -- The Asset Allocation Decision -- The Process of Asset Allocation -- Some Approaches to Asset Allocation -- Implementing Asset Allocation Approaches -- Examples of Asset Allocation -- Risky Portfolios and Combined Portfolios -- Some Practical Problems for Asset Allocation -- The Capital Allocation Line --

Contents note continued: Borrowing and Lending Opportunities on the CAL -- The Capital Market Line and Investment Strategies -- Asset Allocation and Risk Aversion -- Some Common Diversification Fallacies -- The Insurance Principle -- Time Diversification -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- Appendix A Review of Regression Analysis -- Appendix B How to Compute the Covariance and Correlation in Excel -- ch. 8 Efficient Diversification and Capital Market Theory -- Chapter Objectives -- Introduction -- The Markowitz Diversification Approach -- The Markowitz Two-Asset Portfolio -- The Optimal Risky Portfolio and the Capital Allocation Line -- The Efficient Frontier -- Capital Market Theory -- The Capital Asset Pricing Model -- Assumptions of the CAPM -- Implications of the Assumptions -- Implication 1 -- Implication 2 -- Implication 3 -- The Capital and Security Market Lines --

Contents note continued: Uses of CAPM -- Criticism of CAPM -- The Arbitrage Pricing Theory -- Comparing the CAPM and the APT -- Portfolio Performance Evaluation -- CAPM, APT, and Investment Decisions -- Chapter Summary -- Applying Economic Analysis -- The 130/30 Strategy -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- Appendix A How to Find and Graph the Optimal Two-Asset Portfolio Using EXCEL -- Appendix B The Single-Index Model -- ch. 9 Market Efficiency and Behavioral Finance -- Chapter Objectives -- Introduction -- The Efficient Market Hypothesis -- The Notion of Market Efficiency -- The Forms of Market Efficiency -- Weak Form -- Semistrong Form -- Strong Form -- Implications for the Efficient Market Hypothesis -- Implications for Technical Analysis -- Implications for Fundamental Analysis -- Implications for Active and Passive Investment Strategies -- Implications for Investment Managers -- Implications for Asset Pricing Models --

Contents note continued: Anomalies and Tests of Market Efficiency -- Market Anomalies -- Return Patterns -- Day-of-the-Week Effect -- January Effect -- Short- and Long-Horizon Returns -- Size and P/E Effects -- Announcement Effects -- Other Effects -- Summary of Market Efficiency Tests -- Weak Form of Market Efficiency -- Semi-strong Form of Market Efficiency -- Strong Form of Market Efficiency -- Is the Stock Market Efficient? -- Behavioral Finance -- Biases in Information Processing -- Biases in Behavior -- Models of Human Behavior -- Implications for Technical Analysis -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- pt. IV EQUITY PORTFOLIO MANAGEMENT -- ch. 10 Equity and Fundamental Analysis -- Chapter Objectives -- Introduction -- Equity Securities -- Common Stock Characteristics -- Shareholder Equity -- Shareholder Rights -- Voting Privileges -- Types of Common Stock --

Contents note continued: Dividends and Splits -- Preferred Stock Characteristics -- Stock Market Quotations -- Management of an Equity Portfolio -- Passive Equity Portfolio Management -- Individual Investors -- Institutional Investors -- Active Equity Portfolio Management -- Individual Investors -- Institutional Investors -- International Equity Investing -- Fundamental Analysis -- Macroeconomic Analysis -- Macroeconomic Magnitudes -- Economic Policies -- The Business Cycle -- Industry Analysis -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- Appendix: Guidelines for Conducting Industry Analysis -- ch. 11 Equity Valuation and Investment Strategies -- Chapter Objectives -- Introduction -- Equity Prices and Returns -- Some General Valuation Measures -- Book Value -- Price/Book Value -- Price/Sales Value -- Liquidation Value -- Replacement Value --

Contents note continued: The Dividend Discount Model and Its Variants -- The Dividend Discount Model -- The Constant Growth Model -- The Multistage Dividend Growth Model -- Using Earnings Instead of Dividends -- Other Equity Valuation Techniques -- Present Value of Free Cash Flows -- Options Valuation Approach -- Economic Profit -- Other Issues in Equity Valuation -- The Impact of Inflation on Stock Values -- Information Signals/Content of Dividends -- The P/E Ratio and the Stock Market -- Some Strategies on When to Buy/Sell Equities -- When to Buy/Sell a Stock -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- pt. V DEBT SECURITIES -- ch. 12 Bond Fundamentals and Valuation -- Chapter Objectives -- Introduction -- Overview of the Global Bond Market -- The International Bond Market -- The US Bond Market -- Overview of Bond Basics -- Features of a Bond -- Bond Types and Characteristics --

Contents note continued: By Type of Issuer -- Government Bonds -- Other Government and Government-related Bonds -- Corporate Bonds -- International Bonds and Eurobonds -- By Bond Feature -- By Other Characteristics -- Default Risk -- Bond Determinants and Covenants -- Junk Bonds -- Bond Pricing -- Basic Bond Valuation Formulas -- The Inverse Relationship between Prices and Yields -- Bond Yield Measures -- Current Yield -- Yield to Maturity -- Yield to Put -- Yield to Call -- Duration and Convexity -- Duration -- Convexity -- The Yield Curve -- Theories Explaining the Shape of the Yield Curve -- Market Expectations Theory -- Liquidity Preference Theory -- Market Segmentation Theory -- Preferred Habitat Theory -- Significance of the Yield Curve -- A Simple Strategy Using the Yield Curve -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems --

Contents note continued: ch. 13 Bond Portfolio Management and Performance Evaluation -- Chapter Objectives -- Introduction -- Overview of the Bond Invstment Management Process -- Identification of Investor Objectives and Constraints -- Establishment of Investment Policy -- Selection of a Bond Portfolio Management Strategy -- Monitoring and Evaluating Portfolio Performance -- Passive Bond Investment Strategies -- Buy-and-Hold Portfolio Strategy -- Indexing Bond Strategies -- Pure Indexing Strategy -- Enhanced Indexing Strategy -- Immunization Strategy -- Rebalancing -- Dedication Strategy -- Active Bond Portfolio Strategies -- Interest Rate-Anticipation Strategy -- Credit Analysis -- Valuation Analysis -- Bond Swap Strategies -- Substitution Swap -- Yield Swap -- Yield Curve Strategies -- Horizon Analysis -- Other Active Management Strategies -- Horizon Matching Technique -- Contingent Immunization -- Bond Portfolio Performance Measurement and Evaluation --

Contents note continued: Bond Portfolio Performance Measures -- The Arithmetic Average Rate of Return -- The Geometric Rate of Return -- The Dollar-Weighted Rate of Return -- Bond Portfolio Performance Evaluation -- Performance Attribution Analysis -- Bond Market Efficiency and Portfolio Management -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- pt. VI DERIVATIVE MARKETS AND INSTRUMENTS -- ch. 14 Options Markets and Valuation -- Chapter Objectives -- Introduction -- An Overview of the Options Market -- Basic Option Concepts -- Call and Put Option Concepts -- Profits and Losses on Options -- Options Payoffs at Expiration -- The Market for Options -- The Options Clearing Corporation -- Option Market Participants -- Options Products -- Securities with Options -- Some Option Trading Strategies -- Covered Call -- Protective Put -- Some Practical Issues -- Collar -- Straddle -- Married Put --

Contents note continued: Spread Strategies -- Speculating with Options -- Option Valuation -- Fundamental Option Valuation Concepts -- Binomial Option Pricing -- The Black-Scholes-Merton Option Valuation Model -- Using the Black-Scholes-Merton Formula -- Put-Call Parity Formula -- Using Stock Index Options -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- ch. 15 Futures Markets and Strategies -- Chapter Objectives -- Introduction -- The Futures Contract -- Elements of Futures Contracts -- The Clearinghouse -- Settlement and Margin -- Reversing Trades -- An Overview of the Futures Market -- Economic Functions of the Futures Market -- Price Discovery -- Risk Reduction -- Hedging -- Speculating -- Regulation of Futures Markets -- International Futures Exchanges -- The Commodity Futures Market -- Futures and Spot Prices -- Spot Futures Parity -- Basis Risk -- Financial Futures Contracts --

Contents note continued: Some Financial Futures Contracts -- Stock Index Futures -- Interest Rate Futures -- Currency Futures -- Some Useful Information on Financial Futures -- S&P Futures versus Fair Value -- Leverage -- Futures Trading Strategies -- Hedging -- Speculating -- Program Trading and Index Arbitrage -- Using Currency Futures -- Arbitrage Trading -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems -- ch. 16 Other Topics in Investments -- Chapter Objectives -- Introduction -- International Parities and Some Strategies -- Useful Concepts -- Interest Rate Parity -- Carry Trade -- International Arbitrage -- Credit Derivatives -- The Market for Credit Derivatives -- Credit Default Swap -- Total Return Swap -- Asset Swap -- Collateralized Debt Obligation -- Alternative Investments -- What Are Alternative Investments? -- Real Estate Investment Trusts -- Hedge Funds -- Private Equity --

Contents note continued: Infrastructure Funds -- Other Alternative Investments -- Putting It All Together -- Chapter Summary -- Applying Economic Analysis -- International Focus -- Lessons of Our Times -- Key Concepts -- Questions and Problems.