Contents List of Figures Acknowledgements PART I INVESTMENT BASICS Chapter 1 The Investment Framework 1. Introduction 2. The General Investment Environment 2.1 Definition of Investments 2.2 The General Investment Environment 2.2.1 Securities 2.2.
2 Classification of Securities 2.2.3 Types of Investors 2.3 Financial Markets and Intermediaries 2.3.1 The Roles of Financial Markets 2.3.1 The Roles of Financial Intermediaries 3.
The Objectives and Constraints of Investors 3.1 The Objectives of Investors MARKET FLASH Are you realizing your objectives? 3.2 The Constraints of Investors 4. The Investment Management Process 5. The Role of Investment Information 6. Agency and Ethical Issues in Investing 6.1 Asymmetric Information MARKET FLASH Reducing asymmetric information 6.2 The Agent-Principal Problem MARKET FLASH Conflicts between managers and shareholders? 6.
3 Ethics in the Marketplace 6.4 Environmental, Social and Governance 6.4.1 Social Responsibility Issues 6.4.2 Environmental Issues 6.4.3 Corporate Governance Issues 7.
So, Why Study Investments? 8. Chapter Summary 9. The Plan of the Textbook Key Concepts Questions for Thought and Discussion International Focus: Causes and Consequences of the Financial Crisis of 2008 Lessons of our Times: Lessons of the Global Finance Crisis Applying Economic Analysis: Utility and Efficiency Chapter 2 The Investment Decision Process and Investment Strategies 1. Introduction 2. The Investment Process 2.1 The Investor Policy Statement 2.2 The Risk-Return Tradeoff 2.3 The Asset Allocation Step in the Investment Process 2.
4 The Security Selection Step in the Investment Process MARKET FLASH What if the paradigm for long-term investing was to change? 3. General Investment Philosophies and Strategies 3.1 Some Prominent Investment Philosophies 3.2 What is your Investment Philosophy? 3.3 Some Investment Strategies 3.3.1 Top-down and Bottom-up Approaches to Investing 3.3.
2 Active and Passive Investment Strategies MARKET FLASH Active or passive investment strategy? 3.3.3 Other Investment Strategies 3.3.4 Dollar-cost Averaging 3.4.5 Margin Purchases and Short Sales MARKET FLASH China cracks down margin trading violations MARKET FLASH Short sales gone bad 4. Types of Markets and Orders 4.
1 Types of Trading Markets and Orders 4.2 Types of Trading Orders MARKET FLASH Tick sizes 4.3 Finding the Equilibrium Price of a Share 5. Chapter Summary Key Concepts Questions for Thought and Discussion Applying Economic Analysis: Making Investment Decisions International Focus: Stocks or Bonds amid a Weak Economic Recovery? Lessons of our Times: Asset Allocation Lessons from Warren Buffett Chapter 3 Fundamentals of Risk and Return 1. Introduction 2. Measuring Return 2.1 Holding Period Return 2.2 Return over Multiple Periods 2 .
2.1 Arithmetic mean 2.2.1 Geometric mean 2.2.3 The Effective Annual Rate 2.2.4 Yield Definitions and Conventions 2.
2.5 Real Rate of Return 2.2.6 Expected Rate of Return 3. Measuring Risk 3.1 Calculating the Risk of a Single Asset MARKET FLASH Problems with negative interest rates 3.2 Required Returns and Risk Aversion 3.3 Investor Behavior and Low Interest Rates 3.
4 Sources of Risk 3.5 Risk and Investor Economic Decisions 3.6 Utility and Wealth 3.7 Indifference curves and utility function 3.8 Indifference curves and risk aversion 4. Chapter Summary Key Concepts Questions for Thought and Discussion Applying Economic Analysis: Is It Worth Pursuing Further Education? International Focus: Why Treasuries have outperformed equities Lessons of our Times: The Reserve Primary Fund APPENDIX: A Brief Review of the Time Value of Money PART II FINANCIAL MARKETS, INTERMEDIARIES AND INSTRUMENTS Chapter 4 The Global Financial Environment 1. Introduction 2. The Functions of the Global Financial Markets 2.
1 Economic Function 2.2 Pricing Function 2.3 Provision of Services 2.4 Other Functions 3. The Securities Exchanges 3.1 US Organized Stock Exchanges 3.1.1 Types of brokers 3.
1.2 NYSE operations 3.1.3 NYSE-related Exchanges 3.2 US Over-The-Counter Exchanges MARKET FLASH New index for OTC Markets Group 3.2.1 NASDAQ 3.2.
2 Other OTC markets 3.2.3 How to read stock tables 3.3 Some US Stock market Indexes 3.4 Some International Stock Exchanges MARKET FLASH European equity traders want a shorter trading day 3.5 The US Bond Market 3.6 The International Bond Market 4. Trading on the Exchanges 4.
1 Clearing Procedures 4.2 Brokerage Services 4.3 Trading Costs MARKET FLASH Charles Schwab eliminates trading commissions MARKET FLASH Instances of front-running activities 4.4 Automatic Trading Mechanisms MARKET FLASH SEC implements a Limit-Up/Limit-Down plan 5. Globalization and the Regulatory Structure of International Stock Markets 5.1 Globalization and Trends MARKET FLASH Delisting of Chinese stocks? 5.2 Investing Internationally and International Return 5.3 Regulatory Structures in the US Exchanges 6.
Chapter Summary Key Concepts Questions for Thought and Discussion Applying Economic Analysis: Costs and Benefits of Financial Globalization (and Trade) International Focus: New Offerings by the London Stock Exchange Lessons of our Times: Lessons Learned from the Financial Crisis and Recommendations for Financial Institutions APPENDIX : Calculating a Stock Market Index Chapter 5 Money and Capital Markets, Instruments and Strategies 1. Introduction 2. The Money Markets and Its Instruments 2.1 The Money Market and its Characteristics MARKET FLASH High demand for the international money market 2.2 Money Market Instruments 2.2.1 Non-marketable securities 2.2.
2 Marketable securities MARKET FLASH The global market for commercial paper MARKET FLASH Repo worries and bailout efforts MARKET FLASH The debate on replacing the fed funds rate MARKET FLASH Replacing LIBOR 2.2.3 Yields and Spreads in Money Market Instruments 3.The Capital Market and Its Instruments 3.1 The Capital Market and its Characteristics 3.2 Fixed-Income Securities 3.2.1 Federal Government Bonds 3.
2.2 Municipal Securities 3.2.3 Agency Bonds 3.2.4 Corporate Bonds 3.3 Yields and Spreads in Capital Market Instruments 3.4 Equity Securities 3.
5 Derivative Securities 4. Investment Risks in Financial Markets MARKET FLASH Climate-change investment risk 5. Some Money- and Capital-Market Investment Strategies 5.1 Some Money-market investment strategies 5.2 Some Capital-market Investment Strategies 6. Chapter Summary Key Concepts Questions for Thought and Discussion Applying Economic Analysis: Insider Trading International Focus: The Greek Debt Crisis Lessons of our Times: Lessons from Ireland''s Financial Crisis Chapter 6 Investment Bankers and Investment Companies 1. Introduction 2. Investment Banking 2.
1 The Primary Market 2.2 Shelf Registration 2.3 The Investment Banker MARKET FLASH Leading underwriters in the US 3. Initial Public Offering 3.1 IPO participants 3.2 IPO arrangements 3.3 IPO documents 3.4 Road show and book-building 3.
5 Costs of IPO 3.6 Performance of IPOs 4. The Investment Companies Industry 3.1 Functions of Investment Companies 3.2 Net Asset Value 3.3 Types of Investment Companies 3.3.1 Unit Investment Trust 3.
3.2 Closed-End Investment Companies MARKET FLASH The SEC requires CEF to disclose more 3.2.3 Open-End Investment Companies 3.2.4 Fee Structure of Mutual Funds 3.2.5 Picking a Mutual Fund MARKET FLASH Mutual fund expense ratios fell significantly 3.
2.6 Growth of Mutual Funds 3.2.7 Performance of the Mutual Fund Industry 4. Exchange-Traded Funds 4.1 Characteristics of ETFs MARKET FLASH What is happening with ETFs? 4.2 Regulation of ETFs