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Investments: An Introduction / Edition 6
     

Investments: An Introduction / Edition 6

by Herbert B. Mayo
 

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ISBN-10: 0030209943

ISBN-13: 9780030209949

Pub. Date: 08/28/1999

Publisher: Harcourt College Publishers

Product Details

ISBN-13:
9780030209949
Publisher:
Harcourt College Publishers
Publication date:
08/28/1999
Edition description:
Older Edition
Product dimensions:
5.12(w) x 10.24(h) x (d)

Table of Contents

PART I: The Environment of Investing 1(262)
Chapter 1: An Introduction to Investments
5(24)
Portfolio Construction
6(2)
Some Preliminary Definitions
8(2)
Sources of Risk
10(4)
Efficient and Competitive Markets
14(1)
Points of Interest Other Terms Used to Describe Sources of Risk
15(1)
The Internet
15(1)
The Author's Perspective and Investment Philosophy
16(2)
The Plan and Purpose of This Text
18(2)
The Financial Advisor's Investment Case Introduction to Chapter Cases
20(1)
Investment Project
20(3)
Appendix 1: Supply and Demand
23(6)
Chapter 2: The Creation of Financial Assets
29(24)
The Transfer of Funds to Business
30(3)
The Issuing and Selling of New Securities
33(1)
Points of Interest Green Shoes
34(6)
Points of Interest SCOR
40(1)
The Role of Financial Intermediaries
40(6)
Trends in Competition among Financial Intermediaries
46(2)
Summary
48(4)
The Financial Advisor's Investment Case The Demise of a Savings Account
52(1)
Chapter 3: Security Markets
53(37)
Market Makers
54(3)
Security Exchanges
57(5)
Points of Interest The P/E Ratio
62(1)
The Mechanics of Investing in Securities
63(1)
Points of Interest Online Investing
64(2)
Points of Interest Stop Orders and Limit Orders
66(3)
Points of Interest Determining the Percentage Return on a Margin Purchase Including Commissions, Interest Paid, and Dividends Received
69(10)
Points of Interest The Uptick Rule
79(1)
Foreign Securities
79(2)
Regulation
81(3)
Points of Interest Illegal Use of Inside Information
84(1)
Securities Investor Protection Corporation
85(1)
Summary
86(3)
The Financial Advisor's Investment Case Investing An Inheritance
89(1)
Chapter 4: Sources of Information
90(18)
Why Information?
91(1)
Corporate Sources of Information
91(1)
Points of Interest Reading an Annual Report
92(1)
Points of Interest The President's Letter
93(3)
Brokerage Firms' Research Reports
96(1)
Business Publications Related to Investments
96(2)
Points of Interest Background Readings
98(4)
Points of Interest Standard & Poor's Corporation Records and Moody's Manuals
102(2)
Points of Interest Learning While You Drive: Investment Cassettes
104(1)
Other Sources of Information
105(1)
Points of Interest Finding Government Publications on the Web
106(1)
Summary
106(2)
Chapter 5: The Time Value of Money
108(27)
The Future Value of $1
109(4)
The Present Value of $1
113(2)
The Future Sum of an Annuity
115(3)
The Present Value of an Annuity
118(4)
Applications of Compounding and Discounting
122(4)
Nonannual Compounding
126(1)
Points of Interest The Rule of 72
127(1)
Present Value and Security Valuation
127(3)
Summary
130(4)
The Financial Advisor's Investment Case Funding a Pension Plan
134(1)
Chapter 6: The Tax Environment
135(28)
Tax Bases
136(1)
Income Taxation
136(2)
Points of Interest Keeping Abreast of the Tax Laws
138(1)
Tax Shelters
138(2)
Points of Interest The Wash Sale
140(3)
Points of Interest When to Start an IRA
143(1)
Points of Interest The Use of Personal Computers to Complete Your 1040
144(8)
Life Insurance as a Tax Shelter
152(1)
Employee Stock Option Plans as a Tax Shelter
153(2)
Taxation of Wealth
155(2)
Corporate Taxation
157(2)
Summary
159(3)
The Financial Advisor's Investment Case Retirement Planning and Federal Income Taxation
162(3)
Chapter 7: Risk and Portfolio Theory
163(59)
Return
164(5)
The Measurement of Risk
169(9)
Risk Reduction through Diversification: An Illustration
178(4)
Portfolio Theory
182(4)
The Capital Asset Pricing Model
186(3)
Points of Interest A Practical Capital Market Line
189(1)
Beta Coefficients
189(7)
Points of Interest Will the Real Beta Please Stand Up
196(3)
Arbitrage Pricing Theory
199(3)
Summary
202(5)
The Financial Advisor's Investment Case Inferior Investment Alternatives
207(1)
Investment Project
208(1)
Appendix 7: Statistical Tools
209(13)
Chapter 8: Investment Companies
222(41)
Investment Companies: Origins and Terminology
223(3)
Closed-End Investment Companies
226(3)
Points of Interest Initial Public Offerings of Closed-end Investment Companies
229(1)
Unit Trusts
230(1)
Mutual Funds
231(3)
Points of Interest Services Offered by Mutual Funds
234(2)
Points of Interest The Internet and Information Concerning Mutual Funds
236(2)
Points of Interest Family Funds and Supermarkets
238(1)
The Returns Earned on Investments in Mutual Funds
239(6)
Points of Interest The Regulation of Mutual Funds
245(1)
Impact of Income Taxes and Fees on the Investor's Return
245(1)
Points of Interest Retaining Your Mutual Fund Statements
246(3)
Performance Evaluation: Risk Adjustment for Comparing Returns
249(9)
Summary
258(4)
The Financial Advisor's Investment Case Retirement Plans and Investment Choices
262(1)
PART II: Investing in Common Stock 263(230)
Chapter 9: The Valuation of Common Stock
265(48)
The Corporate Form of Business
266(5)
Points of Interest Real Returns
271(1)
Valuation as the Present Value of Dividends and the Growth of Dividends
271(7)
The Investor's Required Return and Stock Valuation
278(3)
Alternative Valuation Techniques
281(1)
Points of Interest Inflation and the Investor's Required Return
282(6)
Points of Interest Valuation and Internet Stocks
288(1)
The Efficient Market Hypothesis
289(12)
Points of Interest The Money Masters
301(1)
Summary
302(5)
The Financial Advisor's Investment Case Determining the Value of a Business
307(1)
Appendix 9: Testing the Efficient Market Hypothesis: The Event Study
308(5)
Chapter 10: Rates of Return on Common Stock Investments
313(36)
Measures of Stock Performance: Averages and Indexes
314(7)
Other Major Indexes of Stock Prices
321(9)
Points of Interest Overstating the Rate of Appreciation in the Value of a House
330(5)
Points of Interest: When a 75 Percent Return Produces a Loss
335(7)
Reducing the Impact of Price Fluctuations: Averaging
342(3)
Summary
345(3)
The Financial Advisor's Investment Case The Calculation of Returns
348(1)
Chapter 11: Dividends: Past, Present, and Future
349(27)
Cash Dividends
350(1)
Points of Interest The Longevity of Cash Dividends
351(4)
Stock Dividends
355(2)
The Stock Split
357(2)
Points of Interest Exxon's Shareholder Investment Program
359(1)
Dividend Reinvestment Plans
359(2)
Repurchases of Stock and Liquidations
361(1)
Estimating Dividend Growth Rates
362(6)
Summary
368(3)
Investment Project
371(1)
The Financial Advisor's Investment Case Strategies to Increase Equity
372(1)
Appendix 11: Use of Regression Analysis to Estimate Growth Rates
373(3)
Chapter 12: The Fundamental Approach to the Selection of Stock
376(37)
The Logical Progression of Fundamental Analysis
377(1)
The Economic Environment
378(1)
Measures of Economic Activity
379(1)
Points of Interest The Easiest Means to Locate Economic Data
380(4)
The Consumer Price Index
384(2)
The Federal Reserve
386(7)
Points of Interest Fed Watching
393(3)
Fiscal Policy
396(2)
Industry Analysis
398(5)
The Anticipated Economic Environment and Investment Strategies
403(3)
Points of Interest Deflation and the Asian Flu
406(4)
Summary
410(2)
The Financial Advisor's Investment Case The Unionville Teachers' Investment Club
412(1)
Chapter 13: Security Selection: Analysis of Financial Statements
413(57)
Ratio Analysis
414(3)
Liquidity Ratios
417(2)
Activity Ratios
419(3)
Profitability Ratios
422(2)
Points of Interest When Is an Increase in Earnings a Loss?
424(2)
Leverage or Capitalization Ratios
426(1)
Points of Interest The Numerical Difference Between the Return of Assets and the Return of Equity
427(4)
Ratio Analysis for Specific Investors
431(2)
Points of Interest The Buy Side and the Sell Side of the Street
433(3)
Points of Interest Netscape and Locating Information on Chesapeake Corporation
436(2)
Financial Ratios and Stock Valuation
438(4)
Alternative Strategies for Selecting Common Stocks
442(2)
Analysis of Financial Statements, Security Selection, and the Internet
444(2)
Analysis of Cash Flow
446(5)
Points of Interest Valuation Techniques and Unique Values
451(1)
Fundamental Analysis in an Efficient Market Environment
452(1)
Summary
453(6)
The Financial Advisor's Investment Case Blue Jeans and Stock Selection
459(3)
Investment Project
462(1)
Appendix 13: Financial Leverage and the Return on Equity
463(7)
Chapter 14: Technical Analysis
470(23)
The Purpose of Technical Approach
471(1)
The Variety of Technical Analysis
471(2)
Points of Interest Technical Analysis and the Internet
473(1)
Market Indicators
473(4)
Specific Stock Indicators
477(9)
The Verification of Technical Analysis
486(1)
Points of Interest The Market Technicians Association
487(2)
Summary
489(2)
The Financial Advisor's Investment Case Moving Averages
491(2)
PART III: Investing in Fixed Income Securities 493(167)
Chapter 15: The Bond Market
495(35)
General Features of Bonds
496(6)
Risk
502(4)
The Mechanics of Purchasing Bonds
506(1)
Variety of Corporate Bonds
507(5)
High-Yield Securities
512(3)
Points of Interest The Internet and Sources of Information on Bonds
515(1)
Returns Earned by Investors in High-Yield Securities
516(2)
Retiring Debt
518(6)
Summary
524(2)
The Financial Advisor's Investment Case Corporate Bonds as a Viable Investment Vehicle
526(1)
Appendix 15: The Term Structure of Interest Rates
527(3)
Chapter 16: The Valuation of Fixed Income Securities
530(56)
Perpetual Bonds
531(2)
Bonds with Maturity Dates
533(4)
Fluctuations in Bond Prices
537(4)
Yields
541(2)
Points of Interest The Accuracy of the Approximation Formula
543(4)
Risk and Fluctuations in Yields
547(4)
The Reinvestment Assumption
551(4)
Duration
555(5)
Management of Bond Portfolios
560(4)
Preferred Stock
564(6)
Summary
570(9)
The Financial Advisor's Investment Case Bonds, Bonds, and More Bonds
579(1)
The Financial Advisor's Investment Case High-Yield Securities and Relative Risk
580(1)
Appendix 16: Bond Discounts/Premiums and Duration Compared
581(5)
Chapter 17: Government Securities
586(44)
The Variety of Federal Government Debt
587(10)
Federal Agencies' Debt
597(6)
State and Local Government Debt
603(6)
Points of Interest COPs
609(2)
Points of Interest WPPSS/WHOOPS
611(1)
Taxable Municipal Securities
612(1)
Points of Interest Prerefunded Municipal Bonds
613(2)
Government Securities and Investment Companies
615(2)
Summary
617(5)
The Financial Advisor's Investment Case Building a Bond Portfolio
622(3)
Appendix 17: Using Yield Curves
623(7)
Chapter 18: Convertible Bonds and Convertible Preferred Stock
630(30)
Features of Convertible Bonds
631(2)
The Valuation of Convertible Bonds
633(6)
Premiums Paid for Convertible Debt
639(3)
Points of Interest The Conversion Parity
642(1)
Convertible Preferred Stock
643(3)
Selecting Convertibles
646(1)
The History of Selected Convertible Bonds
647(2)
Points of Interest Convertibles and Information
649(1)
Put Bonds
650(2)
Investment Companies and Convertible Securities
652(1)
Summary
652(7)
The Financial Advisor's Investment Case The Pros and Cons of Investing in a Convertible Bond
659(1)
PART IV: Investing in Options, Futures, and Tangible Assets 660(117)
Chapter 19: An Introduction to Options
663(45)
The Intrinsic Value of an Option
664(3)
Leverage
667(1)
The Time Premium Paid for an Option
668(3)
Calls
671(6)
Points of Interest Big Profits; Big Losses
677(2)
Puts
679(8)
Points of Interest Love a Stock? Then Sell a Put
687(1)
Price Performance of Puts and Calls
688(2)
Stock Index Options
690(2)
Points of Interest LEAPS
692(1)
Warrants
693(4)
Points of Interest Investment Companies' Use of Options
697(1)
Summary
698(5)
The Financial Advisor's Investment Case A Speculator's Choices
703(1)
Investment Project
704(1)
Appendix 19: Preemptive Rights and Rights Offerings
705(3)
Chapter 20: Option Valuation and Strategies
708(33)
Black/Scholes Option Valuation
709(9)
Put-Call Parity
718(2)
The Hedge Ratio
720(4)
Additional Option Strategies
724(10)
Summary
734(6)
The Financial Advisor's Investment Case Profits and Losses from Straddles
740(1)
Chapter 21: Commodity and Financial Futures
741(36)
What Is Investing in Commodity Futures?
742(1)
The Mechanics of Investing in Commodity Futures
742(6)
Leverage
748(2)
Points of Interest The Pig and the Pyramid of Gold--A Fable for Our Times
750(3)
Hedging
753(1)
Points of Interest Forward Contracts
754(1)
The Selection of Commodity Futures Contracts
755(2)
Points of Interest Taxation of Gains and Losses from Trading in Futures
757(1)
Financial and Currency Futures
757(2)
Points of Interest The Variety of Financial Futures
759(1)
Stock Market Futures
760(3)
Programmed Trading and Index Arbitrage
763(4)
The Pricing of Futures
767(2)
Swaps
769(2)
Summary
771(4)
The Financial Advisor's Investment Case Futures to Defer Taxes
775(2)
PART V: Portfolio Management 777
Chapter 22: Investing in Foreign Securities
779(33)
Global Wealth and World Financial Markets
780(1)
The Special Risks Associated with Foreign Investments
781(1)
Fluctuations in Exchange Rates
782(3)
Balance of Payments
785(4)
Risk Reduction through Hedging with Currency Futures
789(2)
Advantages Offered by Foreign Securities
791(1)
Points of Interest European Options
792(11)
Mutual Funds with Foreign Investments
803(3)
Points of Interest Who's the Largest?
806(1)
Points of Interest Global Investing and the World Wide Web
807(1)
Summary
808(3)
The Financial Advisor's Investment Case Foreign Country Funds and Diversification
811(1)
Chapter 23: Investing in Nonfinancial Assets: Collectibles, Resources, and Real Estate
812(48)
Returns, Markets, and Risk
813(1)
Points of Interest Tangible Assets and Diversification
814(2)
Points of Interest Insuring Your Collectibles
816(1)
Art, Oriental Rugs, and Antiques
816(3)
Points of Interest What Goes Up Must Come Down
819(2)
Precious Metals and Natural Resources
821(8)
Real Estate
829(7)
Points of Interest The Housing Affordability Index
836(3)
Points of Interest Points
839(10)
Points of Interest REIT Distributions and Federal Taxes
849(4)
Summary
853(5)
The Financial Advisor's Investment Case The Apartment
858(1)
The Financial Advisor's Investment Case Collectibles Are Not Commodities
859(1)
Chapter 24: Portfolio Planning and Management
860
The Process of Financial Planning
861(15)
Points of Interest Wrap Accounts
876(1)
Asset Allocation
877(4)
Active versus Passive Management
881(3)
Selecting Mutual Funds
884(1)
Points of Interest The Internet and Information Concerning Mutual Funds
885(1)
Points of Interest Dollar Cost Averaging and Mutual Funds
886(2)
Points of Interest The Specify Share Method for Identifying Shares Sold or Redeemed
888(6)
Benchmarks
894(3)
Index Funds
897(1)
Selling (Redeeming) Mutual Fund Shares
898(2)
Common Sense, Efficient Markets, and Investment Strategies
900(3)
Points of Interest Investing and the Internet
903(1)
Summary
904(4)
The Financial Advisor's Investment Case Goals and Portfolio Section
908(1)
Investment Project
909
Appendix A: Mathematical Tables A-1
Appendix B: Answers to Selected Problems B-1
Index I-1

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