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Test Bank for Essentials of Investments, 11th Edition, Zvi Bodie, Alex Kane, Alan Marcus, ISBN10: 1260013928, ISBN13: 9781260013924

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Test Bank for Essentials of Investments, 11th Edition, Zvi Bodie, Alex Kane, Alan Marcus, ISBN10: 1260013928, ISBN13: 9781260013924

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ISBN-10 ‏ : ‎ 1260013928
ISBN-13 ‏ : ‎ 978-1260013924
Author: Zvi Bodie

The market leading undergraduate investments textbook, Essentials of Investments by Bodie, Kane, and Marcus, emphasizes asset allocation while presenting the practical applications of investment theory. The authors have eliminated unnecessary mathematical detail and concentrate on the intuition and insights that will be useful to practitioners throughout their careers as new ideas and challenges emerge from the financial marketplace. The Eleventh Edition includes increased attention to changes in market structure and trading technology, while continuing to be organized around one basic theme – that security markets are nearly efficient.

Table contents:

Part One: ELEMENTS OF INVESTMENTS
Chapter 1 Investments: Background and Issues
1.1 Real Assets versus Financial Assets
1.2 Financial Assets
1.3 Financial Markets and the Economy
The Informational Role of Financial Markets
Consumption Timing
Allocation of Risk
Separation of Ownership and Management
Corporate Governance and Corporate Ethics
1.4 The Investment Process
1.5 Markets Are Competitive
The Risk-Return Trade-Off
Efficient Markets
1.6 The Players
Financial Intermediaries
Investment Bankers
Venture Capital and Private Equity
1.7 The Financial Crisis of 2008
Antecedents of the Crisis
Changes in Housing Finance
Mortgage Derivatives
Credit Default Swaps
The Rise of Systemic Risk
The Shoe Drops
The Dodd-Frank Reform Act
1.8 Outline of the Text
End-of-Chapter Material
Chapter 2 Asset Classes and Financial Instruments
2.1 The Money Market
Treasury Bills
Certificates of Deposit
Commercial Paper
Bankers’ Acceptances
Eurodollars
Repos and Reverses
Brokers’ Calls
Federal Funds
The LIBOR Market
Yields on Money Market Instruments
2.2 The Bond Market
Treasury Notes and Bonds
Inflation-Protected Treasury Bonds
Federal Agency Debt
International Bonds
Municipal Bonds
Corporate Bonds
Mortgage and Asset-Backed Securities
2.3 Equity Securities
Common Stock as Ownership Shares
Characteristics of Common Stock
Stock Market Listings
Preferred Stock
Depositary Receipts
2.4 Stock and Bond Market Indexes
Stock Market Indexes
The Dow Jones Industrial Average
The Standard & Poor’s 500 Index
Other U.S. Market Value Indexes
Equally Weighted Indexes
Foreign and International Stock Market Indexes
Bond Market Indicators
2.5 Derivative Markets
Options
Futures Contracts
End-of-Chapter Material
Chapter 3 Securities Markets
3.1 How Firms Issue Securities
Privately Held Firms
Publicly Traded Companies
Shelf Registration
Initial Public Offerings
3.2 How Securities are Traded
Types of Markets
Types of Orders
Trading Mechanisms
3.3 The Rise of Electronic Trading
3.4 U.S. Markets
NASDAQ
The New York Stock Exchange
ECNs
3.5 New Trading Strategies
Algorithmic Trading
High-Frequency Trading
Dark Pools
Bond Trading
3.6 Globalization of Stock Markets
3.7 Trading Costs
3.8 Buying on Margin
3.9 Short Sales
3.10 Regulation of Securities Markets
Self-Regulation
The Sarbanes-Oxley Act
Insider Trading
End-of-Chapter Material
Chapter 4 Mutual Funds and Other Investment Companies
4.1 Investment Companies
4.2 Types of Investment Companies
Unit Investment Trusts
Managed Investment Companies
Other Investment Organizations
4.3 Mutual Funds
Investment Policies
How Funds Are Sold
4.4 Costs of Investing in Mutual Funds
Fee Structure
Fees and Mutual Fund Returns
4.5 Taxation of Mutual Fund Income
4.6 Exchange-Traded Funds
4.7 Mutual Fund Investment Performance: A First Look
4.8 Information on Mutual Funds
End-of-Chapter Material
Part TWO: PORTFOLIO THEORY
Chapter 5 Risk, Return, and the Historical Record
5.1 Rates of Return
Measuring Investment Returns over Multiple Periods
Conventions for Annualizing Rates of Return
5.2 Inflation and the Real Rate of Interest
The Equilibrium Nominal Rate of Interest
5.3 Risk and Risk Premiums
Scenario Analysis and Probability Distributions
The Normal Distribution
Normality and the Investment Horizon
Deviation from Normality and Tail Risk
Risk Premiums and Risk Aversion
The Sharpe Ratio
5.4 The Historical Record
Using Time Series of Returns
Risk and Return: A First Look
5.5 Asset Allocation across Risky and Risk-Free Portfolios
The Risk-Free Asset
Portfolio Expected Return and Risk
The Capital Allocation Line
Risk Aversion and Capital Allocation
5.6 Passive Strategies and the Capital Market Line
Historical Evidence on the Capital Market Line
Costs and Benefits of Passive Investing
End-of-Chapter Material
Chapter 6 Efficient Diversification
6.1 Diversification and Portfolio Risk
6.2 Asset Allocation with Two Risky Assets
Covariance and Correlation
Using Historical Data
The Three Rules of Two-Risky-Asset Portfolios
The Risk-Return Trade-Off with Two-Risky-Assets Portfolios
The Mean-Variance Criterion
6.3 The Optimal Risky Portfolio with a Risk-Free Asset
6.4 Efficient Diversification with Many Risky Assets
The Efficient Frontier of Risky Assets
Choosing the Optimal Risky Portfolio
The Preferred Complete Portfolio and a Separation Property
Constructing the Optimal Risky Portfolio: An Illustration
6.5 A Single-Index Stock Market
Statistical Interpretation of the Single-Index Model
Learning from the Index Model
Using Security Analysis with the Index Model
6.6 Risk Pooling, Risk Sharing, and Time Diversification
Time Diversification
End-of-Chapter Material
Chapter 7 Capital Asset Pricing and Arbitrage Pricing Theory
7.1 The Capital Asset Pricing Model
The Model: Assumptions and Implications
Why All Investors Would Hold the Market Portfolio
The Passive Strategy Is Efficient
The Risk Premium of the Market Portfolio
Expected Returns on Individual Securities
The Security Market Line
Applications of the CAPM
7.2 The CAPM and Index Models
7.3 How Well Does the CAPM Predict Risk Premiums?
7.4 Multifactor Models and the CAPM
The Fama-French Three-Factor Model
Estimating a Three-Factor SML
Multifactor Models and the Validity of the CAPM
7.5 Arbitrage Pricing Theory
Diversification in a Single-Index Security Market
Well-Diversified Portfolios
The Security Market Line of the APT
Individual Assets and the APT
Well-Diversified Portfolios in Practice
The APT and the CAPM
Multifactor Generalization of the APT
Smart Betas and Multifactor Models
End-of-Chapter Material
Chapter 8 The Efficient Market Hypothesis
8.1 Random Walks and Efficient Markets
Competition as the Source of Efficiency
Versions of the Efficient Market Hypothesis
8.2 Implications of the EMH
Technical Analysis
Fundamental Analysis
Active versus Passive Portfolio Management
The Role of Portfolio Management in an Efficient Market
Resource Allocation
8.3 Are Markets Efficient?
The Issues
Weak-Form Tests: Patterns in Stock Returns
Predictors of Broad Market Returns
Semistrong Tests: Market Anomalies
Strong-Form Tests: Inside Information
Interpreting the Anomalies
8.4 Mutual Fund and Analyst Performance
Stock Market Analysts
Mutual Fund Managers
So, Are Markets Efficient?
End-of-Chapter Material
Chapter 9 Behavioral Finance and Technical Analysis
9.1 The Behavioral Critique
Information Processing
Behavioral Biases
Limits to Arbitrage
Limits to Arbitrage and the Law of One Price
Bubbles and Behavioral Economics
Evaluating the Behavioral Critique
9.2 Technical Analysis and Behavioral Finance
Trends and Corrections
Sentiment Indicators
A Warning
End-of-Chapter Material
Part THREE: DEBT SECURITIES
Chapter 10 Bond Prices and Yields
10.1 Bond Characteristics
Treasury Bonds and Notes
Corporate Bonds
Preferred Stock
Other Domestic Issuers
International Bonds
Innovation in the Bond Market
10.2 Bond Pricing
Bond Pricing between Coupon Dates
Bond Pricing in Excel
10.3 Bond Yields
Yield to Maturity
Yield to Call
Realized Compound Return versus Yield to Maturity
10.4 Bond Prices over Time
Yield to Maturity versus Holding-Period Return
Zero-Coupon Bonds and Treasury STRIPS
After-Tax Returns
10.5 Default Risk and Bond Pricing
Junk Bonds
Determinants of Bond Safety
Bond Indentures
Yield to Maturity and Default Risk
Credit Default Swaps
10.6 The Yield Curve
The Expectations Theory
The Liquidity Preference Theory
A Synthesis
End-of-Chapter Material
Chapter 11 Managing Bond Portfolios
11.1 Interest Rate Risk
Interest Rate Sensitivity
Duration
What Determines Duration?
11.2 Passive Bond Management
Immunization
Cash Flow Matching and Dedication
11.3 Convexity
Why Do Investors Like Convexity?
11.4 Active Bond Management
Sources of Potential Profit
Horizon Analysis
An Example of a Fixed-Income Investment Strategy
End-of-Chapter Material
Part FOUR: SECURITY ANALYSIS
Chapter 12 Macroeconomic and Industry Analysis
12.1 The Global Economy
12.2 The Domestic Macroeconomy
Gross Domestic Product
Employment
Inflation
Interest Rates
Budget Deficit
Sentiment
12.3 Interest Rates
12.4 Demand and Supply Shocks
12.5 Federal Government Policy
Fiscal Policy
Monetary Policy
Supply-Side Policies
12.6 Business Cycles
The Business Cycle
Economic Indicators
Other Indicators
12.7 Industry Analysis
Defining an Industry
Sensitivity to the Business Cycle
Sector Rotation
Industry Life Cycles
Industry Structure and Performance
End-of-Chapter Material
Chapter 13 Equity Valuation
13.1 Valuation by Comparables
Limitations of Book Value
13.2 Intrinsic Value versus Market Price
13.3 Dividend Discount Models
The Constant-Growth DDM
Stock Prices and Investment Opportunities
Life Cycles and Multistage Growth Models
Multistage Growth Models
13.4 Price–Earnings Ratios
The Price–Earnings Ratio and Growth Opportunities
P/E Ratios and Stock Risk
Pitfalls in P/E Analysis
Combining P/E Analysis and the DDM
Other Comparative Valuation Ratios
13.5 Free Cash Flow Valuation Approaches
Comparing the Valuation Models
The Problem with DCF Models
13.6 The Aggregate Stock Market
End-of-Chapter Material
Chapter 14 Financial Statement Analysis
14.1 The Major Financial Statements
The Income Statement
The Balance Sheet
The Statement of Cash Flows
14.2 Measuring Firm Performance
14.3 Profitability Measures
Return on Assets
Return on Capital
Return on Equity
Financial Leverage and ROE
Economic Value Added
14.4 Ratio Analysis
Decomposition of ROE
Turnover and Asset Utilization
Liquidity Ratios
Market Price Ratios
Choosing a Benchmark
14.5 An Illustration of Financial Statement Analysis
14.6 Comparability Problems
Inventory Valuation
Depreciation
Inflation and Interest Expense
Fair Value Accounting
Quality of Earnings and Accounting Practices
International Accounting Conventions
14.7 Value Investing: The Graham Technique
End-of-Chapter Material
Part FIVE: DERIVATIVE MARKETS
Chapter 15 Options Markets
15.1 The Option Contract
Options Trading
American and European Options
The Option Clearing Corporation
Other Listed Options
15.2 Values of Options at Expiration
Call Options
Put Options
Options versus Stock Investments
15.3 Option Strategies
15.4 Optionlike Securities
Callable Bonds
Convertible Securities
Warrants
Collateralized Loans
Leveraged Equity and Risky Debt
15.5 Exotic Options
Asian Options
Currency-Translated Options
Digital Options
End-of-Chapter Material
Chapter 16 Option Valuation
16.1 Option Valuation: Introduction
Intrinsic and Time Values
Determinants of Option Values
16.2 Binomial Option Pricing
Two-State Option Pricing
Generalizing the Two-State Approach
Making the Valuation Model Practical
16.3 Black-Scholes Option Valuation
The Black-Scholes Formula
The Put-Call Parity Relationship
Put Option Valuation
16.4 Using the Black-Scholes Formula
Hedge Ratios and the Black-Scholes Formula
Portfolio Insurance
Option Pricing and the Crisis of 2008–2009
16.5 Empirical Evidence
End-of-Chapter Material
Chapter 17 Futures Markets and Risk Management
17.1 The Futures Contract
The Basics of Futures Contracts
Existing Contracts
17.2 Trading Mechanics
The Clearinghouse and Open Interest
Marking to Market and the Margin Account
Cash versus Actual Delivery
Regulations
Taxation
17.3 Futures Market Strategies
Hedging and Speculation
Basis Risk and Hedging
17.4 Futures Prices
Spot-Futures Parity
Spreads
17.5 Financial Futures
Stock-Index Futures
Foreign Exchange Futures
Interest Rate Futures
17.6 Swaps
Swaps and Balance Sheet Restructuring
The Swap Dealer
End-of-Chapter Material
Part SIX: ACTIVE INVESTMENT MANAGEMENT
Chapter 18 Evaluating Investment Performance
18.1 The Conventional Theory of Performance Evaluation
Average Rates of Return
Time-Weighted Returns versus Dollar-Weighted Returns
Adjusting Returns for Risk
Risk-Adjusted Performance Measures
The Sharpe Ratio for Overall Portfolios
The Treynor Ratio
The Information Ratio
The Role of Alpha in Performance Measures
Implementing Performance Measurement: An Example
Selection Bias and Portfolio Evaluation
18.2 Style Analysis
18.3 Morningstar’s Risk-Adjusted Rating
18.4 Performance Measurement with Changing Portfolio Composition
18.5 Market Timing
The Potential Value of Market Timing
Valuing Market Timing as a Call Option
The Value of Imperfect Forecasting
18.6 Performance Attribution Procedures
Asset Allocation Decisions
Sector and Security Selection Decisions
Summing Up Component Contributions
End-of-Chapter Material
Chapter 19 International Diversification
19.1 Global Markets for Equities
Developed Countries
Emerging Markets
Market Capitalization and GDP
Home-Country Bias
19.2 Exchange Rate Risk and International Diversification
Exchange Rate Risk
Imperfect Exchange Rate Risk Hedging
Investment Risk in International Markets
International Diversification
Are Benefits from International Diversification Preserved in Bear Markets?
19.3 Political Risk
19.4 International Investing and Performance Attribution
Constructing a Benchmark Portfolio of Foreign Assets
Performance Attribution
End-of-Chapter Material
Chapter 20 Hedge Funds
20.1 Hedge Funds versus Mutual Funds
20.2 Hedge Fund Strategies
Directional versus Nondirectional Strategies
Statistical Arbitrage
20.3 Portable Alpha
An Example of a Pure Play
20.4 Style Analysis for Hedge Funds
20.5 Performance Measurement for Hedge Funds
Liquidity and Hedge Fund Performance
Hedge Fund Performance and Selection Bias
Hedge Fund Performance and Changing Factor Loadings
Tail Events and Hedge Fund Performance
20.6 Fee Structure in Hedge Funds
End-of-Chapter Material
Chapter 21 Taxes, Inflation, and Investment Strategy
21.1 Saving for the Long Run
A Hypothetical Household
The Retirement Annuity
21.2 Accounting for Inflation
A Real Savings Plan
An Alternative Savings Plan
21.3 Accounting for Taxes
21.4 The Economics of Tax Shelters
A Benchmark Tax Shelter
The Effect of the Progressive Nature of the Tax Code
21.5 A Menu of Tax Shelters
Defined Benefit Plans
Defined Contribution Plans
Individual Retirement Accounts
Roth Accounts with the Progressive Tax Code
Risky Investments and Capital Gains as Tax Shelters
Sheltered versus Unsheltered Savings
21.6 Social Security
21.7 Large Purchases
21.8 Home Ownership: The Rent-versus-Buy Decision
21.9 Uncertain Longevity and Other Contingencies
21.10 Matrimony, Bequest, and Intergenerational Transfers
End-of-Chapter Material
Chapter 22 Investors and the Investment Process
22.1 The Investment Management Process
22.2 Investor Objectives
Individual Investors
Professional Investors
Life Insurance Companies
Non-Life-Insurance Companies
Banks
Endowment Funds
22.3 Investor Constraints
Liquidity
Investment Horizon
Regulations
Tax Considerations
Unique Needs
22.4 Investment Policies
Top-Down Policies for Institutional Investors
Active versus Passive Policies
22.5 Monitoring and Revising Investment Portfolios
End-of-Chapter Material
Appendixes
A References
B References to CFA Questions
Index

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Test Bank for Essentials of Investments, 11th Edition, Zvi Bodie, Alex Kane, Alan Marcus, ISBN10: 1260013928, ISBN13: 9781260013924

Test Bank for Essentials of Investments, 11th Edition, Zvi Bodie, Alex Kane, Alan Marcus, ISBN10: 1260013928, ISBN13: 9781260013924

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