Investment Analysis

The textbook is designed as a core text for finance courses that cover market investments, portfolio formation and the management of investment portfolios. As such, the text seeks to convey insight and actual wisdom as to the nature of these activities, and offers the student a rigorous preparation for entry to the funds management industry.

1. Introduction PART A Foundations of investment analysis 2. The valuation of equity shares: the P/E ratio 3. Shareholders' required rate of return (the cost of equity capital) 4. Financial leverage: the value of the firm and the economic cycle 5. Accounting statements and ratio analysis PART B The nature of investment growth 6. The nature of growth (the exponential function) 7. Prediction of returns (the normal distribution) 8. Statistical relations for component assets 9. Growth over many periods 10. Growth with many assets PART C Principles of portfolio construction and management 11. Portfolio choice between risky and risk-free assets 12 A fundamental model of asset pricing and portfolio allocation 13 Fluctuations of opinion: stock mispricing 14 Portfolio algorithms 15 Institutional portfolio management 16 Conclusion and text review