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Fundamentals of Investing and Portfolio Management
Investments and the Investment Process
Introduction
Attributes of Investments
Securities or Property
Direct or Indirect
Debt, Equity, or Derivative Securities
Low- or High-Risk, Long or Short Investments
Domestic or Foreign
The Structure of the Investment Process
An Overview of Various Types of Investments
Short-Term Investments
Common Stock
Fixed-Income Securities
Bonds
Convertible Securities
Preferred Stock
Mutual Funds
Exchange-Traded Funds AKA ETF's
Hedge Funds
Derivatives Securities
Options
Futures
Other Popular Investments
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Common Stock
Introduction
What do stocks have to offer?
Why is common stock appealing?
Putting Stock Price Behavior in Perspective
From Stock Prices to Stock Returns
The Pros and Cons of Stock Ownership
Basic Characteristics of Common Stock
Common Stock as a Corporate Security
Issuing New Shares
Stock Spin-Offs
Stock Splits
Treasury Stock
Classified Common Stock
Types and Uses of Common Stock
Introduction
Types of Stocks
Blue-Chip Stocks
Income Stocks
Growth Stocks
Tech Stocks
Speculative Stocks
Cyclical Stocks
Defensive Stocks
Market-Cap Stocks
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Common Stock Dividends
Introduction
The Dividend Decision
Corporate versus Market Factors
Some Important Dates
Types of Dividends
Dividend Reinvestment Plans
Buying and Selling Stocks
Introduction
Reading the Quotes
Transaction Costs
Common Stock Values
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Fixed Income Securities
Introduction
Why Invest in Bonds?
A Brief History of Bond Prices, Returns, and Interest Rates
Historical Returns
Bonds versus Stocks
Essential Features of a Bond
Introduction
Bond Interest and Principal
Maturity Date
Principles of Bond Price Behavior
Quoting Bond Prices
Call Features—Buyer Beware!
Sinking Funds
Secured or Unsecured Debt
Bond Ratings
How Ratings Work
What Ratings Mean
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The Market for Debt Securities
Introduction
Major Market Segments
Treasury Bonds
Agency Bonds
Municipal Bonds
Tax Advantages
Corporate Bonds
Specialty Issues
Zero-Coupon Bonds
Mortgage-Backed Securities
Collateralized Mortgage Obligations
Asset-Backed Securities
Junk Bonds
U.S.-Pay versus Foreign-Pay Bonds
Convertible Securities
Introduction
Convertibles as Investment Outlets
Convertible Notes and Bonds
Conversion Privilege
LYONs
Sources of Value
Measuring the Value of a Convertible
Investment Value
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Derivative Securities
Introduction
Call and Put Options
Basic Features of Calls and Puts
How Calls and Puts Work
Advantages and Disadvantages
Options Markets
Stock Options
Put and Call Transactions
Options Pricing and Trading
Introduction
The Profit Potential from Puts and Calls
Intrinsic Value
In-the-Money/Out-of-the-Money
Put-Call Parity
What Drives Option Prices
Interest Rates and Option Prices
Trading Strategies
Enhancing Returns: Options Writing and Spreading
Stock-Index and Other Types of Options
Contract Provisions of Stock-Index Options
Putting a Value on Stock-lndex Options
Investment Uses
Other Types of Options
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Portfolio Management
Introduction
The Mutual Fund Concept
An Overview of Mutual Funds
Pooled Diversification
Active versus Passive Management
Attractions and Drawbacks of Mutual Fund Ownership
Performance of Mutual Funds
How Mutual Funds Are Organized and Run
Open- or Closed-End Funds
Closed-End Investment Companies
Exchange-Traded Funds
Some Important Considerations
Other Types of Investment Companies
Types of Funds
Types of Services
Investing in Mutual Funds
Investor Uses of Mutual Funds
The Selection Process
Investing in Closed-End Funds
Measuring Performance
Return and Risk
What are Returns?
Components of Return
Why Return Is Important
Historical Performance
Expected Return
Level of Return
Historical Returns
The Time Value of Money and Returns
Determining a Satisfactory Investment
Measuring Return
Real, Risk-Free, and Required Returns
Holding Period Return
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
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Alternative Investment Strategies
Alternative Investment Strategies
Buy-and-Hold
Current Income
Quality Long-Term Growth
Aggressive Stock Management
Speculation and Short-Term Trading
The Finish Line!
Market-Cap Stocks
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