Spring-03 Investments Zvi Wiener Investments, BKM Ch 1

Zvi WienerBKM Ch 1 slide 2 Main Textbook Bodie, Kane, Marcus, Investments, Irwin McGraw-Hill, 5 edition Following economic and financial news is important!

Zvi WienerBKM Ch 1 slide 3 Part 1: Introduction 1. The Investment Environment 2. Markets and Instruments 3. How Securities are Traded 4. Mutual Funds and Other Investment Companies 5. History of Interest Rates and Risk Premiums

Zvi WienerBKM Ch 1 slide 4 Part 2: Portfolio Theory 6. Risk and Risk Aversion 7. Capital Allocation Between the Risky Asset and the Risk-Free Asset 8. Optimal Risky Portfolios

Zvi WienerBKM Ch 1 slide 5 Part 3: Equilibrium in Capital Markets 9. The Capital Asset Pricing Model 10. Single-Index and Multifactor Models 11. Arbitrage Pricing Theory 12. Market Efficiency 13. Empirical Evidence on Security Returns

Zvi WienerBKM Ch 1 slide 6 Part 4: Fixed-Income Securities 14. Bond Prices and Yields 15. The Term Structure of Interest Rates 16. Fixed-Income Portfolio Management

Zvi WienerBKM Ch 1 slide 7 Part 5: Security Analysis 17. Macroeconomic and Industry Analysis 18. Equity Valuation Models 19. Financial Statement Analysis

Zvi WienerBKM Ch 1 slide 8 Part 6: Options, Futures, and Other Derivatives 20. Options Markets: Introduction 21. Option Valuation 22. Futures Markets 23. Futures and Swaps: A Closer Look

Zvi WienerBKM Ch 1 slide 9 Part 7: Applied Portfolio Management 24. Portfolio Performance Evaluation 25. International Diversification 26. The Process of Portfolio Management 27. The Theory of Active Portfolio Management

Zvi WienerBKM Ch 1 slide 10 If you need additional Assistance 1. Look in the book/slides. 2. Send an to the TA. 3. Request a further explanation in the help session. 4. Send an to me with a copy of the answer you got from the TA. If you need to meet with me, please send me an with your name and a short description of the question you have. I will set up an appointment and try to resolve the problem.

Zvi WienerBKM Ch 1 slide 11 Investments Common courses: math, accounting, law, economics Derivatives Banking Government and FinanceRisk Management Financial Intermediaries Investment Banking Corporate Finance Introduction to Finance

Zvi WienerBKM Ch 1 slide 12 Real assets are used to produce goods and services. Land, building, machines, knowledge, goodwill, etc. Financial assets are claims on real assets or their income. Stock, money, bond, option.

Zvi WienerBKM Ch 1 slide 13 Groups of Users Individuals (Households) Companies (Business Sector) Government and Agencies

Zvi WienerBKM Ch 1 slide 14 Companies Non Financial Companies Financial Intermediaries both assets and liabilities are financial assets exists because small investors are limited

Zvi WienerBKM Ch 1 slide 15 Financial Intermediaries Commercial Banks Investment Banks Exchanges Pension Funds Insurance Companies Credit Card Companies Mortgage Companies S&L, Credit Unions

Zvi WienerBKM Ch 1 slide 16 Government Budget Spending Regulator of Banks Interest Rates (FED) Tax Authorities Insurance very good credit rating - low risk

Zvi WienerBKM Ch 1 slide 17 Types of Markets Direct Search Markets Brokered Markets Dealer Markets Auction Markets

Zvi WienerBKM Ch 1 slide 18 Ongoing Trends Globalization Securitization Credit Enhancement Financial Engineering

Zvi WienerBKM Ch 1 slide 19 Summary real assets and financial assets households, businesses, and government diverse risk and tax preferences financial intermediaries direct search, brokered, dealer, auction stockholders own the companies, bondholders lend money

Zvi WienerBKM Ch 1 slide 20 Markets and Instruments Money Market (up to 1 year to maturity) The Fixed-Income Capital Market Equity Securities Stock and Bond Market Indexes Derivative Markets

Zvi WienerBKM Ch 1 slide 21 Questions 2, 10, 14 Visits the Internet site of the TA stock exchange. What is MAYA? What type of information one can find there? Home Assignment Chapter 1