Fundamentals of Investing

Description

Intended primarily for undergraduate college/university courses in investments, this text also provides practical content to current and aspiring industry professionals. Fundamentals of Investing helps readers make informed investment decisions in their personal and professional lives by providing a solid foundation of core concepts and tools. Smart/Gitman/Joehnk use practical, hands-on applications to introduce the topics and techniques used by both personal investors and money managers. The authors integrate a consistent framework based on learning goals to keep readers focused on what is most important in each chapter. Readers will gain the necessary information for developing, implementing, and monitoring a successful investment program. To order Fundamentals of Investing, 12e, with MyFinanceLab, use the following ISBN:0133423948 / 9780133423945 Fundamentals of Investing, 12e, Plus NEW MyFinanceLab with Pearson eText -- Access Card Packageconsists of: 0133075354 / 9780133075359 Fundamentals of Investing, 12e,0133079023 / 9780133079029 NEW MyFinanceLab with Pearson eText -- Access Card -- forFundamentals of Investing, 12e, Cover Title Page Copyright Page Brief Contents Contents Preface Part One: Preparing to Invest Chapter 1: The Investment Environment Opening Vignette Investments and the Investment Process Attributes of Investments The Structure of the Investment Process Types of Investments Short-Term Investments Common Stock Fixed-Income Securities Mutual Funds Exchange-Traded Funds Hedge Funds Derivative Securities Other Popular Investments Making Investment Plans Steps in Investing Considering Personal Taxes Investing over the Life Cycle Investments and the Business Cycle Meeting Liquidity Needs with Short-Term Investments The Role of Short-Term Investments Common Short-Term Investments Investment Suitability Careers in Finance Summary Discussion Questions Problems Case Problem 1.1 Case Problem 1.2 Excel with Spreadsheets Chapter 2: Securities Markets and Transactions Opening Vignette Securities Markets Types of Securities Markets Broker Markets and Dealer Markets Alternative Trading Systems General Market Conditions: Bull or Bear Globalization of Securities Markets Growing Importance of International Markets International Investment Performance Ways to Invest in Foreign Securities Risks of Investing Internationally Trading Hours and Regulation of Securities Markets Trading Hours of Securities Markets Regulation of Securities Markets Basic Types of Securities Transactions Long Purchase Margin Trading Short Selling Summary Discussion Questions Problems Case Problem 2.1 Case Problem 2.2 Excel with Spreadsheets Chapter 3: Investment Information and Securities Transactions Opening Vignette Investment Research and Planning Getting Started in Investment Research Pros and Cons of the Internet as an Investment Tool Types and Sources of Investment Information Types of Information Sources of Information Understanding Market Averages and Indexes Stock Market Averages and Indexes Bond Market Indicators Making Securities Transactions The Role of Stockbrokers Basic Types of Orders Online Transactions Transaction Costs Investor Protection: SIPC and Arbitration Investment Advisers and Investment Clubs Using an Investment Adviser Investment Clubs Summary Discussion Questions Problems Case Problem 3.1 Case Problem 3.2 Excel with Spreadsheets Part Two: Important Conceptual Tools Chapter 4: Return and Risk Opening Vignette The Concept of Return Components of Return Why Return Is Important Level of Return Historical Returns Time Value of Money and Returns Measuring Return Real, Risk-Free, and Required Returns Holding Period Return Yield: The Internal Rate of Return Finding Growth Rates Risk: The Other Side of the Coin Sources of Risk Risk of a Single Asset Assessing Risk Steps in the Decision Process: Combining Return and Risk Summary Discussion Questions Problems Case Problem 4.1 Case Problem 4.2 Excel with Spreadsheets Chapter-Opening Problem Appendix 4A: The Time Value of Money Opening Vignette Interest: The Basic Return to Savers Simple Interest Compound Interest Computational Aids for Use in Time Value Calculations Financial Calculators Computers and Spreadsheets Future Value: An Extension of Compounding Future Value of an Annuity Present Value: An Extension of Future Value Present Value of a Stream of Returns Present Value of a Mixed Stream Present Value of an Annuity Summary Problems Chapter 5: Modern Portfolio Concepts Opening Vignette Principles of Portfolio Planning Portfolio Objectives Portfolio Return and Standard Deviation Correlation and Diversification International Diversification The Capital Asset Pricing Model Components of Risk Beta: A Measure of Undiversifiable Risk The CAPM: Using Beta to Estimate Return Traditional Versus Modern Portfolio Management The Traditional Approach Modern Portfolio Theory Reconciling the Traditional Approach and MPT Summary Discussion Questions Problems Case Problem 5.1 Case Problem 5.2 Excel with Spreadsheets Chapter-Opening Problem CFA Exam Questions Part Three: Investing in Common Stocks Chapter 6: Common Stocks Opening Vignette What Stocks Have to Offer The Appeal of Common Stocks Putting Stock Price Behavior in Perspective From Stock Prices to Stock Returns A Real Estate Bubble Goes Bust and So Does the Market The Pros and Cons of Stock Ownership Basic Characteristics of Common Stock Common Stock as a Corporate Security Buying and Selling Stocks Common Stock Values Common Stock Dividends The Dividend Decision Types of Dividends Dividend Reinvestment Plans Types and Uses of Common Stock Types of Stocks Investing in Foreign Stocks Alternative Investment Strategies Summary Discussion Questions Problems Case Problem 6.1 Case Problem 6.2 Excel with Spreadsheets Chapter-Opening Problem Chapter 7: Analyzing Common Stocks Opening Vignette Security Analysis Principles of Security Analysis Who Needs Security Analysis in an Efficient Market? Economic Analysis Economic Analysis and the Business Cycle Key Economic Factors Developing an Economic Outlook Industry Analysis Key Issues Developing an Industry Outlook Fundamental Analysis The Concept Financial Statements Financial Ratios Interpreting the Numbers Summary Discussion Questions Problems Case Problem 7.1 Case Problem 7.2 Excel with Spreadsheets Chapter-Opening Problem Chapter 8: Stock Valuation Opening Vignette Valuation: Obtaining a Standard of Performance Valuing a Company and Its Future Developing an Estimate of Future Behavior The Valuation Process Stock Valuation Models The Dividend Valuation Model Other Approaches to Stock Valuation Other Price-Relative Procedures Summary Discussion Questions Problems Case Problem 8.1 Case Problem 8.2 Excel with Spreadsheets Chapter-Opening Problem Chapter 9: Market Efficiency and Behavioral Finance Opening Vignette Efficient Markets The Efficient Markets Hypothesis Market Anomalies Possible Explanations Behavioral Finance: A Challenge to the Efficient Markets Hypothesis Investor Behavior and Security Prices Implications of Behavioral Finance for Security Analysis Technical Analysis Measuring the Market Trading Rules and Measures Charting Summary Discussion Questions Problems Case Problem 9.1 Case Problem 9.2 Excel with Spreadsheets CFA Exam Questions Part Four: Investing in Fixed-Income Securities Chapter 10: Fixed-Income Securities Opening Vignette Why Invest in Bonds? Putting Bond Market Performance in Perspective Exposure to Risk Essential Features of a Bond Bond Interest and Principal Maturity Date Principles of Bond Price Behavior Quoting Bond Prices Call Features—Let the Buyer Beware! Sinking Funds Secured or Unsecured Debt Bond Ratings The Market for Debt Securities Major Market Segments Specialty Issues A Global View of the Bond Market Convertible Securities Convertibles as Investment Outlets Sources of Value Measuring the Value of a Convertible Summary Discussion Questions Problems Case Problem 10.1 Case Problem 10.2 Excel with Spreadsheets Chapter-Opening Problem Chapter 11: Bond Valuation Opening Vignette The Behavior of Market Interest Rates Keeping Tabs on Market Interest Rates What Causes Rates to Move? The Term Structure of Interest Rates and Yield Curves The Pricing of Bonds The Basic Bond Valuation Model Annual Compounding Semiannual Compounding Accrued Interest Measures of Yield and Return Current Yield Yield to Maturity Yield to Call Expected Return Valuing a Bond Duration and Immunization The Concept of Duration Measuring Duration Bond Duration and Price Volatility Effective Duration Uses of Bond Duration Measures Bond Investment Strategies Passive Strategies Trading on Forecasted Interest Rate Behavior Bond Swaps Summary Discussion Questions Problems Case Problem 11.1 Case Problem 11.2 Excel with Spreadsheets CFA Exam Questions Part Five: Portfolio Management Chapter 12: Mutual Funds and Exchange-Traded Funds Opening Vignette The Mutual Fund Concept An Overview of Mutual Funds Exchange-Traded Funds Some Important Considerations Other Types of Investment Companies Types of Funds and Services Types of Mutual Funds Investor Services Investing in Mutual Funds Investor Uses of Mutual Funds The Selection Process Investing in Closed-End Funds Measuring Performance Summary Discussion Questions Problems Case Problem 12.1 Case Problem 12.2 Excel with Spreadsheets Chapter-Opening Problem Chapter 13: Managing Your Own Portfolio Opening Vignette Constructing a Portfolio Using an Asset Allocation Scheme Investor Characteristics and Objectives Portfolio Objectives and Policies Developing an Asset Allocation Scheme Evaluating the Performance of Individual Investments Obtaining Data Indexes of Investment Performance Measuring the Performance of Investments Comparing Performance to Investment Goals Assessing Portfolio Performance Measuring Portfolio Return Comparison of Return with Overall Market Measures Portfolio Revision Timing Transactions Formula Plans Using Limit and Stop-Loss Orders Warehousing Liquidity Timing Investment Sales Summary Discussion Questions Problems Case Problem 13.1 Case Problem 13.2 Excel with Spreadsheets CFA Exam Questions Part Six: Derivative Securities Chapter 14: Options: Puts and Calls Opening Vignette Put and Call Options Basic Features of Puts and Calls Options Markets Stock Options Options Pricing and Trading The Profit Potential from Puts and Calls Intrinsic Value What Drives Option Prices? Trading Strategies Stock-Index and Other Types of Options Stock-Index Options: Contract Provisions Investment Uses Other Types of Options Summary Discussion Questions Problems Case Problem 14.1 Case Problem 14.2 Excel with Spreadsheets Chapter-Opening Problem Chapter 15: Futures Markets and Securities Opening Vignette The Futures Market Market Structure Trading in the Futures Market Commodities Basic Characteristics Trading Commodities Financial Futures The Financial Futures Market Trading Techniques Financial Futures and the Individual Investor Options on Futures Summary Discussion Questions Problems Case Problem 15.1 Case Problem 15.2 Excel with Spreadsheets CFA Exam Questions Glossary A B C D E F G H I J L M N O P Q R S T U V W Y Z Index A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Credits