Understanding investments : theories and strategies / Nikiforos T. Laopodis.

Format:

Book

Author/Creator:

Laopodis, Nikiforos, 1961- author.

Language:

English

Subjects (All):

Investments.

Risk management.

Portfolio management.

Physical Description:

1 online resource (673 pages)

Edition:

Second edition.

Place of Publication:

Abingdon, Oxon ; New York, NY : Routledge, Taylor & Francis Group, 2021.

Summary:

"This revised and fully expanded edition of Understanding Investments continues to incorporate the elements of traditional investments textbooks but goes further in that the material is presented from an intuitive, practical point of view, and the supplementary material included in each chapter lends itself to both class discussion and further reading by students. It provides the essential tools to navigate the complex, global financial markets and instruments including relevant (and classic) academic research and market perspectives. The author has developed a number of the key innovative features of the book. One of the unique features is the inclusion of the economic angle, whereby each chapter includes a section dedicated to the economic analysis of that chapter's material. Additionally, all chapters contain sections on strategies that investors can apply in specific situations and the pros and cons of each are also discussed. The book provides further clarification of some of the concepts discussed in the previous edition, thereby offering a more detailed analysis and discussion, with more real-world examples. The author has added new, shorter text boxes, which he has labelled 'Market Flash' to highlight the use of, or changes in: current practices in the field; updates on strategies as applied by professionals; provision of useful information for an investor; updates on regulations; and anything else that might be relevant in discussing and applying a concept. This second edition also includes new sections on core issues in the investment space, such as alternative investments, disruptive technologies and future trends in investment management. This textbook is intended for undergraduate students majoring or minoring in finance and additionally for students in economics and related disciplines who wish to take an elective course in finance or investments"-- Provided by publisher.

Contents:

Cover

Half Title

Title Page

Copyright Page

Dedication

Contents

List of illustrations

Acknowledgments

Preface to second edition

Preface to first edition

PART I INVESTMENT BASICS

1 The investment framework

1.1 Introduction

1.2 The general financial and economic environment

1.2.1 Definition of investments

1.2.2 The general investment environment

1.2.2.1 Securities

1.2.2.2 Classification of securities

1.2.2.3 Types of investors

1.2.3 Financial markets and intermediaries

1.2.3.1 The roles of financial markets

1.2.3.2 The roles of financial intermediaries

1.3 The objectives and constraints of investors

1.3.1 The objeetives of investors

MARKET FLASH Are you realizing your objectives?

1.3.2 The constraints of investors

1.4 The investment management process

1.5 The role of investment information

1.6 Agency and ethical issues in investing

1.6.1 Asymmetric information

MARKET FLASH Reducing asymmetric information

1.6.2 The agent-principal problem

MARKET FLASH Conflicts between managers and shareholders?

1.6.3 Ethics in the marketplace

1.6.4 Environmental, social, and governance

1.6.4.1 Social responsibility issues

1.6.4.2 Environmental issues

1.6.4.3 Corporate governance issues

1.7 So why study investments?

1.8 Chapter summary

1.9 The plan of the textbook

Applying economic analysis: Utility and efficiency

International focus: Causes and consequences of the financial crisis of 2008

Lessons of our times: Lessons of the global financial crisis

Key concepts

Questions and problems

2 The investment decision process and investment strategies

2.1 Introduction

2.2 The investment process

2.2.1 The investor policy statement

2.2.2 The risk-return trade-off

2.2.3 The asset allocation step in the investment process.

2.2.4 The security selection step in the investment process

MARKET FLASH What if the paradigm for long-term investing was to change?

2.3 General investment philosophies and strategies

2.3.1 Some prominent investment philosophies

2.3.2 What is your investment philosophy?

2.3.3 Some investment strategies

2.3.3.1 Top-down and bottom-up approaches to investing

2.3.3.2 Active and passive investment strategies:

MARKET FLASH Active or passive investment strategy?

2.3.3.3 Other investment strategies

2.3.3.4 Dollar-cost averaging

2.3.3.5 Margin purchases and short sales

MARKET FLASH China cracks down on margin trading violations

MARKET FLASH Short sales gone bad

2.4 Types of markets and orders

2.4.1 Types of trading markets

2.4.2 Types of trading orders

MARKET FLASH Tick sizes

2.4.3 Finding the equilibrium price of a share

2.5 Chapter summary

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

3 Fundamentals of risk and return

3.1 Introduction

3.2 Measuring return

3.2.1 Holding period return

3.2.2 Return over multiple periods

3.2.2.1 Arithmetic mean

3.2.2.2 Geometrie mean

3.2.2.3 The effective annual rate

3.2.2.4 Yield definitions and conventions

3.2.2.5 Real rate of return

3.2.2.6 Expected rate of return

3.3 Measuring risk

3.3.1 Calculating the risk of a single asset

MARKET FLASH Problems with negative interest rates

3.3.2 Required returns and risk aversion

3.3.3 Investor behavior and low interest rates

3.3.5 Risk and investor economic decisions

3.3.6 Utility and wealth

3.3.7 Indifference curves and utility function.

3.3.8 Indifference curves and risk aversion

3.4 Chapter summary

Applying economic analysis: Is it worth pursuing further education?

International focus: Treasuries outperform stocks

Lessons of our times: The Reserve Primary Fund

Appendix: A brief review of the time value of money (TMV)

PART II FINANCIAL MARKETS, INTERMEDIARIES, AND INSTRUMENTS

4 The global financial environment

4.1 Introduction

4.2 The functions of die global financial markets

4.2.1 Economic function

4.2.2 Pricing function

4.2.3 Provision of services

4.2.4 Other functions

4.3 The securities exchanges

4.3.1 US organized stock exchanges

4.3.1.1 Types of brokers

4.3.1.2 NYSE operations

4.3.1.3 NYSE-related exchanges

4.3.2 US Over-the-counter securities markets

MARKET FLASH New index for OTC Markets Group

4.3.2.1 NASDAQ

4.3.2.2 Other OTC markets

4.3.2.3 How to read stock tables

4.3.3 Some US stock market indexes

4.3.4 Some international stock exchanges

MARKET FLASH European equity traders want a shorter trading day

4.3.5 The US bond market

4.3.6 The international bond market

4.4 Trading on the exchanges

4.4.1 Clearing procedures

4.4.2 Brokerage services

4.4.3 Trading costs

MARKET FLASH Charles Schwab eliminates trading commissions

MARKET FLASH Instances of front-running activities

4.4.4 Automatic trading mechanisms

MARKET FLASH SEC implements a Limit Up/Limit Down plan

4.5 Globalization and the regulatory structure of international stock markets

4.5.1 Globalization and trends

MARKET FLASH Delisting of Chinese stocks?

4.5.2 Investing internationally and international return

4.5.3 Regulatory structures in the US exchanges

4.6 Chapter summary.

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

5 Money and capital market instruments and strategies

5.1 Introduction

5.2 The money market and its instruments

5.2.1 The money market and its characteristics

MARKET FLASH High demand for the international money market

5.2.2 Money market instruments

5.2.2.1 Nonmarketable securities

5.2.2.2 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

5.2.2.3 Yields and spreads in money market instruments

5.3 The capital market and its instruments

5.3.1 The capital market and its characteristics

5.3.2 Fixed-income securities

5.3.2.1 Federal government bonds

5.3.2.2 Municipal securities

5.3.2.3 Agency bonds

5.3.2.4 Corporate bonds

5.3.3 Yields and spreads in capital market instruments

5.3.4 Equity securities

5.3.5 Derivative securities

5.4 Investment risks in financial markets

MARKET FLASH Climate-change investment risk

5.5 Some money and capital market investment strategies

5.5.1 Some money market Investment strategies

5.5.2 Some capital market investment strategies

5.6 Chapter summary

Applying economic analysis: Insider trading

International focus: The Greek debt crisis

Lessons of our times: Lessons from Iceland's financial crisis

6 Investment bankers and investment companies

6.1 Introduction

6.2 Investment banking.

6.2.1 The primary market

6.2.2 Shelf Registration

6.2.3 The investment banker

MARKET FLASH Leading underwriters in the US

6.3 Initial public offering

6.3.1 IPO participants

6.3.2 IPO arrangements

6.3.3 IPO documents

6.3.4 Road show and book building

6.3.5 Costs of IPO

6.3.6 Performance of IPOs

6.4 The investment companies industry

6.4.1 Functions of investment companies

6.4.2 Net asset value

6.4.3 Types of investment companies

6.4.3.1 Unit investment trust

6.4.3.2 Closed-end investment companies

MARKET FLASH The SEC requires CEF to disclose more

6.4.3.3 Open-end investment companies

6.4.3.4 Fee structure of mutual funds

6.4.3.5 Picking a mutual fund

MARKET FLASH Mutual fund expense ratios fell significantly

6.4.3.6 Growth of mutual funds

6.4.3.7 Performance of the mutual fund industry

6.5 Exchange-traded funds

6.5.1 Characteristics of ETFs

6.5.2 Regulation of ETFs

MARKET FLASH What is happening with ETFs?

6.6 Some strategies in mutual fund investments

6.6.1 Simple strategies

6.6.2 More robust strategies

6.7 Other types of investment companies

6.8 Chapter summary

Applying economic analysis: Cost-benefit analysis at the ICI

International focus: Global IPOs

Lessons of our times: Bogle on the mutual fund industry

PART III PORTFOLIO THEORY

7 Diversification and asset allocation

7.1 Introduction

7.2 The diversification principle

7.2.1 Diversification types

7.2.1.1 Naïve or random diversification

7.2.1.2 International diversification

7.2.1.3 Efficient diversification

7.2.2 Covariance and correlation

7.3 The asset allocation decision

7.3.1 The process of asset allocation

7.3.2 Some strategies of asset allocation

7.3.3 Some approaches to asset allocation.

7.3.4 Implementing asset allocation approaches.

Notes:

Revised edition of the author's Understanding investments, 2012.

Description based on print version record.

ISBN:

1-00-302747-4

1-000-07488-9

1-003-02747-4

1-000-07474-9

9781003027478

OCLC:

1139065273