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Cengage Learning
Investments (with Thomson ONE - Business School Edition and Stock-Trak Coup / Edition 7

Investments (with Thomson ONE - Business School Edition and Stock-Trak Coup / Edition 7

by Frank K. Reilly


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Product Details

ISBN-13: 2900324655802
Publisher: Cengage Learning
Publication date: 05/15/2007
Edition description: REV
Pages: 734
Product dimensions: 6.00(w) x 1.25(h) x 9.00(d)

About the Author

Professor Frank K. Reilly received his BBA (Cum Laude) at the University of Notre Dame; MBA at Northwestern University; and Ph.D. at the University of Chicago, and is a Chartered Financial Analyst (CFA). Dr. Reilly is the Bernard J. Hank Professor of Finance, Mendoza College of Business, University of Notre Dame, and from 1981—1987, he was Dean of that College. Prior to 1981, Professor Reilly was a professor at the University of Illinois at Urbana—Champaign, the University of Wyoming, and the University of Kansas. He was included in the list of Outstanding Educators in America, received the Alumni Excellence in Graduate Teaching Award and the Outstanding Educator Award from the MBA class at the University of Illinois and the Outstanding Teachers Award from the MBA class at the University of Notre Dame, and the Faculty Award from the University of Notre Dame. Recently he was part of the inaugural group selected as a Fellow of the Financial Management Association International. At the 2001 AIMR annual meeting in Los Angeles, he received the Daniel J. Forrestal III Leadership Award for Professional Ethics and Standards of Investment Practice.

Edgar A. Norton, Jr. is professor of finance and associate dean for the College of Business at Illinois State University. He holds a double major in computer science and economics from Rensselaer Polytechnic Institute, where he graduated magna cum laude. Professor Norton received his M.S. and Ph.D. from the University of Illinois at Urbana—Champaign. A Chartered Financial Analyst (CFA), he regularly receives certificates of achievement, signifying his continual development in the field of investments. Professor Norton hasserved as a grader for Chartered Financial Analyst exams, as a curriculum consultant for the Chartered Financial Analyst equity specialization program, and on the CFA Institute's Council of Examiners. He has taught at Fairleigh Dickinson University, Liberty University, and Northwest Missouri State University. He has served on the Board of Directors and as president of the Midwest Finance Association.

Professor Norton has authored or co—authored more than 30 papers that have been published in journals and conference proceedings, as well as presented at international, national, and regional conferences. His papers have been published in journals such as Financial Review, Academy of Management Executive, Journal of the Midwest Finance Association, Journal of Business Venturing, Journal of Business Ethics, Journal of Small Business Finance, Journal of Business Research, Small Business Economics, and Journal of Small Business Management. He co—authored a paper that received an Award of Excellence at the 36th International Council of Small Business World Conference, held in Vienna, Austria. He is co—author of several books, including Finance: An Introduction to Institutions, Investments, and Management; Foundations of Financial Management; and Economic Justice in Perspective: A Book of Readings. Professor Norton has been listed in Who's Who in the East, Who's Who in American Education, and Who's Who Among Young American Professionals.

Table of Contents

About the Authorsxiv
Part 1The Investment Environmentxvi
Chapter 1The Investment Setting2
What Is an Investment?2
Key Issues in Investing5
The Financial Environment11
Investment Strategies14
Ethics and Job Opportunities in Investments16
Investments Online19
Chapter 2Return and Risk Basics23
An Example of Return and Risk23
Types of Returns24
Measures of Historical Rates of Return30
Calculating Expected Rates of Return33
Defining Risk37
Measuring Risk38
Determinants of Required Rates of Return42
Investments Online47
Chapter 3Selecting Investments in a Global Market54
The Case for Global Investments55
Global Investment Choices66
Historical Risk/Return on Various Investments81
Investments Online86
Appendix 393
Chapter 4Mutual Funds and Other Managed Investments96
What Is a Mutual Fund?96
Types of Mutual Funds Based on Portfolio Objectives99
The Prospectus102
Other Sources of Information about Mutual Funds109
Performance of Investment Companies111
Suggested Mutual Fund Investment Strategies119
A Review of Other Managed Investments121
Investments Online126
Chapter 5The Asset Allocation Decision131
Managing Risk132
Individual Investor Life Cycle133
The Portfolio Management Process135
The Need for a Policy Statement136
Input to the Policy Statement139
The Importance of Asset Allocation149
Asset Allocation and Cultural Differences154
Investments Online157
Appendix 5167
Chapter 6Organization and Functioning of Securities Markets172
What Is a Market?173
Primary Capital Markets175
Secondary Financial Markets178
Regional Exchanges and the Over-the-Counter Market187
Detailed Analysis of Exchange Markets192
Changes in the Securities Markets201
Investments Online210
Appendix 6215
Chapter 7Security-Market Indicator Series218
Uses of Security-Market Indexes219
Differentiating Factors in Constructing Market Indexes220
Stock-Market Indicator Series220
Bond-Market Indicator Series231
Composite Stock-Bond Indexes233
Comparison of Indexes over Time235
Investments Online239
Appendix 7242
Part 2Managing Risk244
Chapter 8An Introduction to Portfolio Management246
Some Background Assumptions246
Markowitz Portfolio Theory248
Investments Online268
Chapter 9An Introduction to Asset Pricing Models273
Capital Market Theory: an Overview274
The Capital Asset Pricing Model: Expected Return and Risk283
Arbitrage Pricing Theory (APT)290
Investments Online296
Chapter 10Efficient Capital Markets303
Why Should Capital Markets Be Efficient?304
Alternative Efficient Market Hypotheses305
Tests and Results of Efficient Market Hypotheses306
Behavioral Finance325
Implications of Efficient Capital Markets326
Investments Online332
Chapter 11An Introduction to Derivative Instruments339
Why Do Derivatives Exist?340
Forward Contracts342
Futures Contracts344
Option Trading Strategies358
Put/Call Parity369
Investments Online371
Chapter 12Derivatives: Analysis and Valuation377
Futures Valuation Issues377
Advanced Applications of Financial Futures381
Options on Futures385
Valuation of Call and Put Options390
Black-Scholes Option-Pricing Formula391
Option-Like Securities397
Investments Online405
Part 3Equity Securities: Valuation and Management414
Chapter 13Economic and Industry Analysis416
Relating Economic Analysis to Efficient Markets417
Generic Approaches to Security Analysis417
Why a Three-Step Valuation Process?419
A Quick Review of Economic Concepts424
Influences on the Economy and Security Markets430
Forecasting Tools434
Risks in Economic Forecasting438
Expectational Analysis438
Industry Analysis442
Links between the Economy and Industry Sectors442
Structural Influences on the Economy and Industry444
Competitive Structure of an Industry448
Industry Life-Cycle Analysis450
Conducting an Industry Analysis453
Investments Online455
Appendix 13465
Chapter 14Analysis of Financial Statements467
Purpose of This Chapter467
Major Financial Statements468
Analysis of Financial Ratios474
Computation of Financial Ratios475
Evaluating Internal Liquidity478
Evaluating Operating Performance482
Risk Analysis493
Analysis of Growth Potential502
Comparative Analysis of Ratios505
Analysis of Non-U.S. Financial Statements507
The Quality of Financial Statements507
The Value of Financial Statement Analysis508
Specific Uses of Financial Ratios509
Investments Online513
Chapter 15Company Analysis and Stock Valuation525
Company Analysis versus the Valuation and Selection of Stock526
The Search for True Growth Stocks528
Theory of Valuation529
Valuation of Alternative Investments531
Economic, Industry, and Structural Links to Company Analysis543
Company Analysis544
Estimating Intrinsic Values for Walgreens548
Specific Valuation with the P/E Ratio567
Making the Investment Decision571
Influences on Analysts573
Investments Online575
Appendix 15A580
Appendix 15B584
Chapter 16Technical Analysis586
Underlying Assumptions of Technical Analysis587
Advantages of Technical Analysis589
Challenges to Technical Analysis590
Technical Trading Rules and Indicators591
Technical Analysis of Foreign Markets604
Technical Analysis of Bond Markets605
Investments Online608
Chapter 17Equity-Portfolio Management613
Passive versus Active Management614
Overview of Passive Equity-Portfolio Management Strategies614
Overview of Active Equity-Portfolio Management Strategies617
Futures and Options in Equity-Portfolio Management626
Taxable Portfolios636
Asset Allocation Strategies642
Investments Online644
Part 4Fixed-Income Securities: Analysis and Management652
Chapter 18Fixed-Income Analysis654
The Fundamentals of Bond Valuation655
Computing Bond Yields658
Calculating Future Bond Prices664
What Determines Interest Rates?668
What Determines the Price Volatility for Bonds?679
Investments Online692
Chapter 19Fixed-Income Portfolio Management699
Alternative Bond-Portfolio Strategies699
Using Derivative Securities in Fixed-Income Portfolio Management718
Investments Online729
Part 5Monitoring Portfolios736
Chapter 20Evaluation of Portfolio Management738
Composite Portfolio Performance Measures739
Benchmark Portfolios751
Benchmarking and Portfolio Style759
Determining Reasons for Superior (or Inferior) Performance763
Evaluation of Bond-Portfolio Performance765
Investments Online768
Appendix 20776
Appendix AHow to Become a CFA Charterholder779
Appendix BAssociation for Investment Management and Research (AIMR): The Code of Ethics and Standards of Professional Conduct780
Appendix CInterest Tables782
Appendix DStandard Normal Probabilities786
Name and Company Index787
Subject Index790

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