{"product_id":"fundamentals-of-financial-instruments-isbn-9781119816614","title":"Fundamentals of Financial Instruments","description":"\u003cp\u003eIn the newly revised Second Edition of \u003ci\u003eFundamentals of Financial Instruments: An Introduction to Stocks, Bonds, Foreign Exchange, and Derivatives\u003c\/i\u003e, renowned finance trainer Sunil Parameswaran delivers a comprehensive introduction to the full range of financial products commonly offered in the financial markets. \u003c\/p\u003e\u003cp\u003eUsing clear, worked examples of everything from basic equity and debt securities to complex instruments—like derivatives and mortgage-backed securities – the author outlines the structure and dynamics of the free-market system and explores the environment in which financial instruments are traded. This one-of-a-kind book also includes: \u003c\/p\u003e\u003cul\u003e \u003cli\u003eNew discussions on interest rate derivatives, bonds with embedded options, mutual funds, ETFs, pension plans, financial macroeconomics, orders and exchanges, and Excel functions for finance\u003c\/li\u003e \u003cli\u003eSupplementary materials to enhance the reader’s ability to apply the material contained within\u003c\/li\u003e \u003cli\u003eA foundational exploration of interest rates and the time value of money\u003c\/li\u003e\n\u003c\/ul\u003e\u003cp\u003e\u003ci\u003eFundamentals of Financial Instruments\u003c\/i\u003e is the ideal resource for business school students at the undergraduate and graduate levels, as well as anyone studying financial management or the financial markets. It also belongs on the bookshelves of executive education students and finance professionals seeking a refresher on the fundamentals of their industry. \u003c\/p\u003e\u003cp\u003ePreface xxiii\u003c\/p\u003e \u003cp\u003ePreface to the First Edition xxiv\u003c\/p\u003e \u003cp\u003eAcknowledgments xxv\u003c\/p\u003e \u003cp\u003eAbout the Author xxvi\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 An Introduction to Financial Institutions, Instruments, and Markets 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Role of an Economic System 1\u003c\/p\u003e \u003cp\u003eA Command Economy 2\u003c\/p\u003e \u003cp\u003eAMarket Economy 2\u003c\/p\u003e \u003cp\u003eClassification of Economic Units 4\u003c\/p\u003e \u003cp\u003eAn Economy’s Relationship with the ExternalWorld 6\u003c\/p\u003e \u003cp\u003eThe Balance of Trade 8\u003c\/p\u003e \u003cp\u003eThe Current Account Balance 8\u003c\/p\u003e \u003cp\u003eFinancial Assets 9\u003c\/p\u003e \u003cp\u003eMoney 10\u003c\/p\u003e \u003cp\u003eMoney as a Unit of Account or a Standard of Value 10\u003c\/p\u003e \u003cp\u003eMoney as a Medium of Exchange 11\u003c\/p\u003e \u003cp\u003eMoney as a Store of Value 11\u003c\/p\u003e \u003cp\u003eMoney Is Perfectly Liquid 11\u003c\/p\u003e \u003cp\u003eEquity Shares 12\u003c\/p\u003e \u003cp\u003eDebt Securities 12\u003c\/p\u003e \u003cp\u003ePreferred Shares 14\u003c\/p\u003e \u003cp\u003eForeign Exchange 14\u003c\/p\u003e \u003cp\u003eDerivatives 14\u003c\/p\u003e \u003cp\u003eForward and Futures Contracts 15\u003c\/p\u003e \u003cp\u003eOptions Contracts 16\u003c\/p\u003e \u003cp\u003eSwaps 18\u003c\/p\u003e \u003cp\u003eMortgages and Mortgage-backed Securities 19\u003c\/p\u003e \u003cp\u003eHybrid Securities 19\u003c\/p\u003e \u003cp\u003ePrimary Markets and Secondary Markets 19\u003c\/p\u003e \u003cp\u003eExchanges and Over-the-Counter (OTC) Markets 21\u003c\/p\u003e \u003cp\u003eBrokers and Dealers 22\u003c\/p\u003e \u003cp\u003eThe Need for Brokers and Dealers 23\u003c\/p\u003e \u003cp\u003eTrading Positions 24\u003c\/p\u003e \u003cp\u003eThe Buy-side and the Sell-side 25\u003c\/p\u003e \u003cp\u003eInvestment Bankers 25\u003c\/p\u003e \u003cp\u003eDirect and Indirect Markets 26\u003c\/p\u003e \u003cp\u003eMutual Funds 27\u003c\/p\u003e \u003cp\u003eMoney and Capital Markets 30\u003c\/p\u003e \u003cp\u003eThe Eurocurrency Market 31\u003c\/p\u003e \u003cp\u003eThe International Bond Market 32\u003c\/p\u003e \u003cp\u003eGlobalization of Equity Markets 34\u003c\/p\u003e \u003cp\u003eDual Listing 35\u003c\/p\u003e \u003cp\u003eFungibility 37\u003c\/p\u003e \u003cp\u003eArbitrage 37\u003c\/p\u003e \u003cp\u003eArbitrage with ADRs 38\u003c\/p\u003e \u003cp\u003eGDRs 39\u003c\/p\u003e \u003cp\u003eRisk 39\u003c\/p\u003e \u003cp\u003eAfter the Trade – Clearing and Settlement 41\u003c\/p\u003e \u003cp\u003eDematerialization and the Role of a Depository 42\u003c\/p\u003e \u003cp\u003eCustodial Services 43\u003c\/p\u003e \u003cp\u003eGlobalization – The New Mantra 43\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Mathematics of Finance 46\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eInterest Rates 46\u003c\/p\u003e \u003cp\u003eThe Real Rate of Interest 46\u003c\/p\u003e \u003cp\u003eThe Fisher Equation 48\u003c\/p\u003e \u003cp\u003eSimple Interest \u0026amp; Compound Interest 49\u003c\/p\u003e \u003cp\u003e\u003ci\u003eVariables and Corresponding Symbols \u003c\/i\u003e50\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSimple Interest \u003c\/i\u003e50\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCompound Interest \u003c\/i\u003e51\u003c\/p\u003e \u003cp\u003eProperties 53\u003c\/p\u003e \u003cp\u003e\u003ci\u003eEffective Versus Nominal Rates of Interest \u003c\/i\u003e55\u003c\/p\u003e \u003cp\u003eA Symbolic Derivation 56\u003c\/p\u003e \u003cp\u003ePrinciple of Equivalency 56\u003c\/p\u003e \u003cp\u003eContinuous Compounding 57\u003c\/p\u003e \u003cp\u003eFuture Value 58\u003c\/p\u003e \u003cp\u003ePresent Value 59\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Mechanics of Present Value Calculation \u003c\/i\u003e59\u003c\/p\u003e \u003cp\u003eHandling a Series of Cash Flows 60\u003c\/p\u003e \u003cp\u003eThe Internal Rate of Return 61\u003c\/p\u003e \u003cp\u003eEvaluating an Investment 63\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Future Value Approach \u003c\/i\u003e63\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Present Value Approach \u003c\/i\u003e63\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Rate of Return Approach \u003c\/i\u003e63\u003c\/p\u003e \u003cp\u003eAnnuities: An Introduction 64\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePresent Value \u003c\/i\u003e64\u003c\/p\u003e \u003cp\u003e\u003ci\u003eFuture Value \u003c\/i\u003e65\u003c\/p\u003e \u003cp\u003eAnnuity Due 66\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePresent Value \u003c\/i\u003e66\u003c\/p\u003e \u003cp\u003e\u003ci\u003eFuture Value \u003c\/i\u003e67\u003c\/p\u003e \u003cp\u003ePerpetuities 67\u003c\/p\u003e \u003cp\u003eThe Amortization Method 68\u003c\/p\u003e \u003cp\u003eAmortization with a Balloon Payment 70\u003c\/p\u003e \u003cp\u003eThe Equal Principal Repayment Approach 71\u003c\/p\u003e \u003cp\u003eTypes of Interest Computation 71\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Simple Interest Approach \u003c\/i\u003e72\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Add-on Rate Approach \u003c\/i\u003e72\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Discount Technique \u003c\/i\u003e73\u003c\/p\u003e \u003cp\u003eLoans with a Compensating Balance 73\u003c\/p\u003e \u003cp\u003eTime Value of Money–related Functions in Excel 73\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Future Value (FV) Function in Excel \u003c\/i\u003e74\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Present Value Function in Excel \u003c\/i\u003e75\u003c\/p\u003e \u003cp\u003eComputing the Present and Future Values of Annuities and Annuities Due in Excel 75\u003c\/p\u003e \u003cp\u003eAmortization Schedules and Excel 76\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Equity Shares, Preferred Shares, and Stock Market Indices 78\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 78\u003c\/p\u003e \u003cp\u003ePar Value Versus Book Value 79\u003c\/p\u003e \u003cp\u003eAccounting for a Stock Issue 80\u003c\/p\u003e \u003cp\u003eVoting Rights 80\u003c\/p\u003e \u003cp\u003e\u003ci\u003eStatutory Versus Cumulative Voting \u003c\/i\u003e81\u003c\/p\u003e \u003cp\u003e\u003ci\u003eProxies \u003c\/i\u003e81\u003c\/p\u003e \u003cp\u003eDividends 82\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDividend Yield \u003c\/i\u003e83\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDividend Reinvestment Plans \u003c\/i\u003e84\u003c\/p\u003e \u003cp\u003e\u003ci\u003eStock Dividends \u003c\/i\u003e85\u003c\/p\u003e \u003cp\u003eTreasury Stock 86\u003c\/p\u003e \u003cp\u003eAccounting for Treasury Stock 86\u003c\/p\u003e \u003cp\u003eSplits and Reverse Splits 87\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCosts Associated with Splits and Stock Dividends \u003c\/i\u003e89\u003c\/p\u003e \u003cp\u003ePreemptive Rights 89\u003c\/p\u003e \u003cp\u003eInterpreting Stated Ratios 91\u003c\/p\u003e \u003cp\u003eHandling Fractions 91\u003c\/p\u003e \u003cp\u003ePhysical Certificates Versus Book Entry 92\u003c\/p\u003e \u003cp\u003eTracking Stock 92\u003c\/p\u003e \u003cp\u003eReport Cards 93\u003c\/p\u003e \u003cp\u003eTypes of Stocks 93\u003c\/p\u003e \u003cp\u003e\u003ci\u003eInterest-sensitive Stocks \u003c\/i\u003e93\u003c\/p\u003e \u003cp\u003eRisk and Return and the Concept of Diversification 94\u003c\/p\u003e \u003cp\u003ePreferred Shares 96\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCallable Preferred Stock \u003c\/i\u003e97\u003c\/p\u003e \u003cp\u003e\u003ci\u003eConvertible Preferred Shares \u003c\/i\u003e97\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCumulative Preferred Shares \u003c\/i\u003e98\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAdjustable-Rate Preferred Shares \u003c\/i\u003e100\u003c\/p\u003e \u003cp\u003e\u003ci\u003eParticipating Preferred Shares \u003c\/i\u003e100\u003c\/p\u003e \u003cp\u003eDividend Discount Models 100\u003c\/p\u003e \u003cp\u003eA General Valuation Model 101\u003c\/p\u003e \u003cp\u003eThe Constant Growth Model 102\u003c\/p\u003e \u003cp\u003eThe Two-Stage Model 102\u003c\/p\u003e \u003cp\u003eThe Three-Stage Model 103\u003c\/p\u003e \u003cp\u003eThe H Model 105\u003c\/p\u003e \u003cp\u003eStock Market Indices 105\u003c\/p\u003e \u003cp\u003ePrice-weighted Indices 105\u003c\/p\u003e \u003cp\u003e\u003ci\u003eChanging the Divisor \u003c\/i\u003e107\u003c\/p\u003e \u003cp\u003eThe Importance of Price 109\u003c\/p\u003e \u003cp\u003eValue-weighted Indices 110\u003c\/p\u003e \u003cp\u003e\u003ci\u003eChanging the Divisor \u003c\/i\u003e111\u003c\/p\u003e \u003cp\u003eChanging the Base Period Capitalization 113\u003c\/p\u003e \u003cp\u003eEquallyWeighted Indices 113\u003c\/p\u003e \u003cp\u003eTracking Portfolios 114\u003c\/p\u003e \u003cp\u003e\u003ci\u003eRebalancing a Tracking Portfolio \u003c\/i\u003e114\u003c\/p\u003e \u003cp\u003eEquallyWeighted Portfolios 114\u003c\/p\u003e \u003cp\u003ePrice-weighted Portfolios 116\u003c\/p\u003e \u003cp\u003eRights Issues 117\u003c\/p\u003e \u003cp\u003eValue-weighted Portfolios 117\u003c\/p\u003e \u003cp\u003eHandling a Rights Issue 119\u003c\/p\u003e \u003cp\u003eThe Free-floating Methodology 120\u003c\/p\u003e \u003cp\u003eWell-known Global Indices 121\u003c\/p\u003e \u003cp\u003eMargin Trading and Short-selling 121\u003c\/p\u003e \u003cp\u003eTerminology 121\u003c\/p\u003e \u003cp\u003eCase A: The Market Rises 124\u003c\/p\u003e \u003cp\u003eCase B: The Market Declines 124\u003c\/p\u003e \u003cp\u003eCase A: The Market Rises 125\u003c\/p\u003e \u003cp\u003eCase B: The Market Declines 125\u003c\/p\u003e \u003cp\u003eInterest and Commissions 125\u003c\/p\u003e \u003cp\u003eCase A: The Market Rises 126\u003c\/p\u003e \u003cp\u003eCase B: The Market Declines 126\u003c\/p\u003e \u003cp\u003eMaintenance Margin 126\u003c\/p\u003e \u003cp\u003eShort-selling 127\u003c\/p\u003e \u003cp\u003eMaintenance of a Short Position 130\u003c\/p\u003e \u003cp\u003eShorting Against the Box 131\u003c\/p\u003e \u003cp\u003eThe Risk Factor 131\u003c\/p\u003e \u003cp\u003eThe Economic Role of Short Sales 132\u003c\/p\u003e \u003cp\u003eThe Uptick Rule 132\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Bonds 134\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 134\u003c\/p\u003e \u003cp\u003eTerms Used in the Bond Market 136\u003c\/p\u003e \u003cp\u003e\u003ci\u003eFace Value \u003c\/i\u003e136\u003c\/p\u003e \u003cp\u003e\u003ci\u003eTerm to Maturity \u003c\/i\u003e136\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCoupon \u003c\/i\u003e136\u003c\/p\u003e \u003cp\u003e\u003ci\u003eYield to Maturity \u003c\/i\u003e137\u003c\/p\u003e \u003cp\u003eValuation of a Bond 137\u003c\/p\u003e \u003cp\u003ePar, Premium, and Discount Bonds 138\u003c\/p\u003e \u003cp\u003eEvolution of the Price 139\u003c\/p\u003e \u003cp\u003eZero-coupon Bonds 140\u003c\/p\u003e \u003cp\u003eValuing a Bond in Between Coupon Dates 141\u003c\/p\u003e \u003cp\u003eDay-Count Conventions 142\u003c\/p\u003e \u003cp\u003eActual-Actual 142\u003c\/p\u003e \u003cp\u003eThe Treasury’s Approach 143\u003c\/p\u003e \u003cp\u003eCorporate Bonds 144\u003c\/p\u003e \u003cp\u003eAccrued Interest 144\u003c\/p\u003e \u003cp\u003eNegative Accrued Interest 145\u003c\/p\u003e \u003cp\u003eYields 146\u003c\/p\u003e \u003cp\u003eThe Current Yield 147\u003c\/p\u003e \u003cp\u003eSimple Yield to Maturity 148\u003c\/p\u003e \u003cp\u003eYield to Maturity 148\u003c\/p\u003e \u003cp\u003eApproximate Yield to Maturity 149\u003c\/p\u003e \u003cp\u003eZero-coupon Bonds and the YTM 150\u003c\/p\u003e \u003cp\u003eAnalyzing the YTM 150\u003c\/p\u003e \u003cp\u003eThe Realized Compound Yield 152\u003c\/p\u003e \u003cp\u003eReinvestment and Zero-Coupon Bonds 152\u003c\/p\u003e \u003cp\u003eThe Holding Period Yield 153\u003c\/p\u003e \u003cp\u003eTaxable Equivalent Yield 153\u003c\/p\u003e \u003cp\u003eCredit Risk 154\u003c\/p\u003e \u003cp\u003eBond Insurance 156\u003c\/p\u003e \u003cp\u003eEquivalence with Zero-coupon Bonds 156\u003c\/p\u003e \u003cp\u003eSpot Rates 156\u003c\/p\u003e \u003cp\u003eThe Coupon Effect 157\u003c\/p\u003e \u003cp\u003eBootstrapping 158\u003c\/p\u003e \u003cp\u003eForward Rates 158\u003c\/p\u003e \u003cp\u003eThe Yield Curve and The Term Structure 159\u003c\/p\u003e \u003cp\u003eShapes of the Term Structure 159\u003c\/p\u003e \u003cp\u003eTheories of the Term Structure 160\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Pure or Unbiased Expectations Hypothesis \u003c\/i\u003e160\u003c\/p\u003e \u003cp\u003eThe Liquidity Premium Hypothesis 160\u003c\/p\u003e \u003cp\u003eThe Money Substitute Hypothesis 161\u003c\/p\u003e \u003cp\u003eThe Market Segmentation Hypothesis 161\u003c\/p\u003e \u003cp\u003eThe Preferred Habitat Theory 161\u003c\/p\u003e \u003cp\u003eThe Short Rate 162\u003c\/p\u003e \u003cp\u003eFloating Rate Bonds 163\u003c\/p\u003e \u003cp\u003eSimple Margin 165\u003c\/p\u003e \u003cp\u003eBonds with Embedded Options 165\u003c\/p\u003e \u003cp\u003eCallable Bonds 165\u003c\/p\u003e \u003cp\u003eYield to Call 166\u003c\/p\u003e \u003cp\u003ePutable Bonds 167\u003c\/p\u003e \u003cp\u003eConvertible Bonds 168\u003c\/p\u003e \u003cp\u003eUsing Short Rates to Value Bonds 168\u003c\/p\u003e \u003cp\u003ePrice Volatility 170\u003c\/p\u003e \u003cp\u003eA Concise Formula 171\u003c\/p\u003e \u003cp\u003eDuration and Price Volatility 171\u003c\/p\u003e \u003cp\u003eProperties of Duration 172\u003c\/p\u003e \u003cp\u003eDollar Duration 172\u003c\/p\u003e \u003cp\u003eConvexity 172\u003c\/p\u003e \u003cp\u003eA Concise Formula 174\u003c\/p\u003e \u003cp\u003eDollar Convexity 175\u003c\/p\u003e \u003cp\u003eProperties of Convexity 175\u003c\/p\u003e \u003cp\u003eImmunization 175\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAnalysis \u003c\/i\u003e176\u003c\/p\u003e \u003cp\u003eTreasury Auctions 177\u003c\/p\u003e \u003cp\u003eWhen Issued Trading 179\u003c\/p\u003e \u003cp\u003ePrice Quotes 179\u003c\/p\u003e \u003cp\u003eSTRIPS 179\u003c\/p\u003e \u003cp\u003eInflation Indexed Bonds 180\u003c\/p\u003e \u003cp\u003eComputing Price Given Yield and Vice Versa in Excel 182\u003c\/p\u003e \u003cp\u003eComputing Duration in Excel 185\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Money Markets 187\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 187\u003c\/p\u003e \u003cp\u003eMarket Supervision 190\u003c\/p\u003e \u003cp\u003eThe Federal Reserve System 190\u003c\/p\u003e \u003cp\u003eKey Dates in the Case of Cash Market Instruments 191\u003c\/p\u003e \u003cp\u003eThe Modified Following Business Day Convention 192\u003c\/p\u003e \u003cp\u003eThe End\/End Rule 192\u003c\/p\u003e \u003cp\u003eThe Interbank Market 193\u003c\/p\u003e \u003cp\u003eTypes of Loans 193\u003c\/p\u003e \u003cp\u003eLIBOR 194\u003c\/p\u003e \u003cp\u003eLIBID 194\u003c\/p\u003e \u003cp\u003eSONIA 194\u003c\/p\u003e \u003cp\u003eTransitioning from LIBOR 195\u003c\/p\u003e \u003cp\u003eInterest Computation Methods 195\u003c\/p\u003e \u003cp\u003eTerm Money Market Deposits 197\u003c\/p\u003e \u003cp\u003eMoney Market Forward Rates 197\u003c\/p\u003e \u003cp\u003eFederal Funds 198\u003c\/p\u003e \u003cp\u003eFederal Funds Versus Clearinghouse Funds 199\u003c\/p\u003e \u003cp\u003eCorrespondent Banks: Nostro and Vostro Accounts 200\u003c\/p\u003e \u003cp\u003eTreasury Bills 200\u003c\/p\u003e \u003cp\u003eReopenings 201\u003c\/p\u003e \u003cp\u003eYields on Discount Securities 202\u003c\/p\u003e \u003cp\u003eNotation 202\u003c\/p\u003e \u003cp\u003eDiscount Rates and T-bill Prices 202\u003c\/p\u003e \u003cp\u003eThe Bond Equivalent Yield (BEY) 203\u003c\/p\u003e \u003cp\u003eCase A: \u003ci\u003eTm \u003c\/i\u003e\u0026lt; 182 days 203\u003c\/p\u003e \u003cp\u003eThe Money Market Yield 205\u003c\/p\u003e \u003cp\u003eCase B: \u003ci\u003eTm \u003c\/i\u003e\u0026gt; 182 days 205\u003c\/p\u003e \u003cp\u003eHolding Period Return 207\u003c\/p\u003e \u003cp\u003eValue of an 01 208\u003c\/p\u003e \u003cp\u003eConcept of Carry 208\u003c\/p\u003e \u003cp\u003eConcept of a Tail 208\u003c\/p\u003e \u003cp\u003eT-Bill Related Functions in Excel 209\u003c\/p\u003e \u003cp\u003eTBILLPRICE 209\u003c\/p\u003e \u003cp\u003eTBILLYIELD 210\u003c\/p\u003e \u003cp\u003eTBILLEQ 210\u003c\/p\u003e \u003cp\u003eDISC 210\u003c\/p\u003e \u003cp\u003eTreasury Auctions 211\u003c\/p\u003e \u003cp\u003eTypes of Auctions 211\u003c\/p\u003e \u003cp\u003eResults of an Auction 212\u003c\/p\u003e \u003cp\u003ePrimary Dealers and Open Market Operations 213\u003c\/p\u003e \u003cp\u003eRepurchase Agreements 213\u003c\/p\u003e \u003cp\u003eReverse Repos 214\u003c\/p\u003e \u003cp\u003eGeneral Collateral Versus Special Repos 215\u003c\/p\u003e \u003cp\u003eMargins 215\u003c\/p\u003e \u003cp\u003eSale and Buyback 217\u003c\/p\u003e \u003cp\u003eCollateral 217\u003c\/p\u003e \u003cp\u003eRepos and Open Market Operations 217\u003c\/p\u003e \u003cp\u003eNegotiable CDs 218\u003c\/p\u003e \u003cp\u003eNotation 218\u003c\/p\u003e \u003cp\u003eCost of a CD for the Issuing Bank 221\u003c\/p\u003e \u003cp\u003eTerm CDs 221\u003c\/p\u003e \u003cp\u003eCDs Versus Money Market Time Deposits 224\u003c\/p\u003e \u003cp\u003eCommercial Paper 224\u003c\/p\u003e \u003cp\u003eLetters of Credit and Bank Guarantees 225\u003c\/p\u003e \u003cp\u003eYankee Paper 226\u003c\/p\u003e \u003cp\u003eCredit Rating 227\u003c\/p\u003e \u003cp\u003eMoody’s Rating Scale 227\u003c\/p\u003e \u003cp\u003eS\u0026amp;P’s Rating Scale 227\u003c\/p\u003e \u003cp\u003eFitch’s Rating Scale 228\u003c\/p\u003e \u003cp\u003eBills of Exchange 228\u003c\/p\u003e \u003cp\u003eDocuments Against Payment (DAP) Versus Documents Against Acceptance (DAA) Transactions 230\u003c\/p\u003e \u003cp\u003eEligible and Noneligible Bank Bills 230\u003c\/p\u003e \u003cp\u003eBuying and Selling Bills 230\u003c\/p\u003e \u003cp\u003eBankers’ Acceptance 231\u003c\/p\u003e \u003cp\u003eAcceptance Credits 232\u003c\/p\u003e \u003cp\u003eEurocurrency Deposits 232\u003c\/p\u003e \u003cp\u003eAppendix 234\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Forward and Futures Contracts 235\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 235\u003c\/p\u003e \u003cp\u003eMarking to Market for a Trader in Practice 242\u003c\/p\u003e \u003cp\u003eDelivery Options 242\u003c\/p\u003e \u003cp\u003eProfit Diagrams 242\u003c\/p\u003e \u003cp\u003eValue at Risk 244\u003c\/p\u003e \u003cp\u003eThe Expected Shortfall 245\u003c\/p\u003e \u003cp\u003eSpot-Futures Equivalence 246\u003c\/p\u003e \u003cp\u003eProducts and Exchanges 247\u003c\/p\u003e \u003cp\u003eCash-and-carry Arbitrage 247\u003c\/p\u003e \u003cp\u003eReverse Cash-and-carry Arbitrage 247\u003c\/p\u003e \u003cp\u003eRepo and Reverse Repo Rates 248\u003c\/p\u003e \u003cp\u003eSynthetic Securities 248\u003c\/p\u003e \u003cp\u003eValuation 248\u003c\/p\u003e \u003cp\u003eThe Case of Assets Making Payouts 249\u003c\/p\u003e \u003cp\u003ePhysical Assets 250\u003c\/p\u003e \u003cp\u003eNet Carry 252\u003c\/p\u003e \u003cp\u003eBackwardation and Contango 252\u003c\/p\u003e \u003cp\u003eThe Case of Multiple Deliverable Grades 253\u003c\/p\u003e \u003cp\u003eRisk Arbitrage 255\u003c\/p\u003e \u003cp\u003eThe Case of Multiplicative Adjustment 255\u003c\/p\u003e \u003cp\u003eThe Case of Additive Adjustment 256\u003c\/p\u003e \u003cp\u003eTrading Volume and Open Interest 259\u003c\/p\u003e \u003cp\u003eDelivery 261\u003c\/p\u003e \u003cp\u003eCash Settlement 262\u003c\/p\u003e \u003cp\u003eHedging and Speculation 262\u003c\/p\u003e \u003cp\u003eRolling a Hedge 264\u003c\/p\u003e \u003cp\u003eTailing a Hedge 264\u003c\/p\u003e \u003cp\u003eThe Minimum Variance Hedge Ratio 265\u003c\/p\u003e \u003cp\u003eEstimation of the Hedge Ratio and the Hedging Effectiveness 266\u003c\/p\u003e \u003cp\u003eCross-hedging 266\u003c\/p\u003e \u003cp\u003eSpeculation 266\u003c\/p\u003e \u003cp\u003eLeverage 268\u003c\/p\u003e \u003cp\u003eContract Value 269\u003c\/p\u003e \u003cp\u003eForward Versus Futures Prices 270\u003c\/p\u003e \u003cp\u003eHedging the Rate of Return on a Stock Portfolio 271\u003c\/p\u003e \u003cp\u003eChanging the Beta 272\u003c\/p\u003e \u003cp\u003eProgram Trading 273\u003c\/p\u003e \u003cp\u003eStock Picking 275\u003c\/p\u003e \u003cp\u003ePortfolio Insurance 277\u003c\/p\u003e \u003cp\u003eImportance of Futures 279\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Options Contracts 280\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 280\u003c\/p\u003e \u003cp\u003eNotation 282\u003c\/p\u003e \u003cp\u003eExercising Options 282\u003c\/p\u003e \u003cp\u003eMoneyness 285\u003c\/p\u003e \u003cp\u003eExchange-Traded Options 286\u003c\/p\u003e \u003cp\u003eOption Class and Option Series 287\u003c\/p\u003e \u003cp\u003eFLEX Options 287\u003c\/p\u003e \u003cp\u003eContract Assignment 288\u003c\/p\u003e \u003cp\u003eAdjusting for Corporate Actions 288\u003c\/p\u003e \u003cp\u003eNonnegative Option Premia 289\u003c\/p\u003e \u003cp\u003eIntrinsic Value and Time Value 289\u003c\/p\u003e \u003cp\u003eTime Value of American Options 290\u003c\/p\u003e \u003cp\u003eTime Value at Expiration 291\u003c\/p\u003e \u003cp\u003ePut-Call Parity 291\u003c\/p\u003e \u003cp\u003eImplications for the Time Value 294\u003c\/p\u003e \u003cp\u003ePut-Call Parity with Dividends 295\u003c\/p\u003e \u003cp\u003eImplications for the Time Value 296\u003c\/p\u003e \u003cp\u003eA Very Important Property for American Calls 297\u003c\/p\u003e \u003cp\u003eEarly Exercise of Options: An Analysis 298\u003c\/p\u003e \u003cp\u003eProfit Profiles 299\u003c\/p\u003e \u003cp\u003eSpeculation with Options 301\u003c\/p\u003e \u003cp\u003eHedging with Options 303\u003c\/p\u003e \u003cp\u003e\u003ci\u003eUsing Call Options to Protect a Short Position \u003c\/i\u003e303\u003c\/p\u003e \u003cp\u003e\u003ci\u003eUsing Put Options to Protect a Long Spot Position \u003c\/i\u003e304\u003c\/p\u003e \u003cp\u003eValuation 305\u003c\/p\u003e \u003cp\u003eThe Binomial Option Pricing Model 307\u003c\/p\u003e \u003cp\u003eThe Two-period Model 309\u003c\/p\u003e \u003cp\u003eValuation of European Put Options 310\u003c\/p\u003e \u003cp\u003eValuing American Options 311\u003c\/p\u003e \u003cp\u003eImplementing the Binomial Model in Practice 312\u003c\/p\u003e \u003cp\u003eThe Black-Scholes Model 313\u003c\/p\u003e \u003cp\u003ePut-Call Parity 314\u003c\/p\u003e \u003cp\u003eInterpretation of the Black-Scholes Formula 314\u003c\/p\u003e \u003cp\u003eThe Greeks 315\u003c\/p\u003e \u003cp\u003eOption Strategies 316\u003c\/p\u003e \u003cp\u003e\u003ci\u003eBull Spreads \u003c\/i\u003e316\u003c\/p\u003e \u003cp\u003e\u003ci\u003eBear Spreads \u003c\/i\u003e318\u003c\/p\u003e \u003cp\u003e\u003ci\u003eButterfly Spread \u003c\/i\u003e320\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Convexity Property \u003c\/i\u003e321\u003c\/p\u003e \u003cp\u003e\u003ci\u003eA Straddle \u003c\/i\u003e323\u003c\/p\u003e \u003cp\u003e\u003ci\u003eA Strangle \u003c\/i\u003e324\u003c\/p\u003e \u003cp\u003eFutures Options 326\u003c\/p\u003e \u003cp\u003ePut-Call Parity 327\u003c\/p\u003e \u003cp\u003eThe Black Model 327\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Foreign Exchange 329\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 329\u003c\/p\u003e \u003cp\u003eCurrency Codes 330\u003c\/p\u003e \u003cp\u003eBase and Variable Currencies 330\u003c\/p\u003e \u003cp\u003eDirect and Indirect Quotes 331\u003c\/p\u003e \u003cp\u003eEuropean Terms and American Terms 331\u003c\/p\u003e \u003cp\u003eBid and Ask Quotes 331\u003c\/p\u003e \u003cp\u003eAppreciating and Depreciating Currencies 332\u003c\/p\u003e \u003cp\u003eConverting Direct Quotes to Indirect Quotes 333\u003c\/p\u003e \u003cp\u003ePoints 333\u003c\/p\u003e \u003cp\u003eRates of Return 334\u003c\/p\u003e \u003cp\u003eThe Impact of Spreads on Returns 335\u003c\/p\u003e \u003cp\u003eArbitrage in Spot Markets 336\u003c\/p\u003e \u003cp\u003eOne-Point Arbitrage 336\u003c\/p\u003e \u003cp\u003eTwo-Point Arbitrage 336\u003c\/p\u003e \u003cp\u003eTriangular Arbitrage 337\u003c\/p\u003e \u003cp\u003eCross Rates 338\u003c\/p\u003e \u003cp\u003eMarket Rates and Exchange Margins 339\u003c\/p\u003e \u003cp\u003eValue Dates 340\u003c\/p\u003e \u003cp\u003eThe Forward Market 340\u003c\/p\u003e \u003cp\u003eOutright Forward Rates 341\u003c\/p\u003e \u003cp\u003eSwap Points 341\u003c\/p\u003e \u003cp\u003eBroken-Dated Contracts 343\u003c\/p\u003e \u003cp\u003eCovered Interest Arbitrage 344\u003c\/p\u003e \u003cp\u003eA Perfect Market 345\u003c\/p\u003e \u003cp\u003eForeign Exchange Swaps 346\u003c\/p\u003e \u003cp\u003eThe Cost 347\u003c\/p\u003e \u003cp\u003eThe Motive 348\u003c\/p\u003e \u003cp\u003eInterpretation of the Swap Points 349\u003c\/p\u003e \u003cp\u003eA Clarification 350\u003c\/p\u003e \u003cp\u003eShort-Date Contracts 350\u003c\/p\u003e \u003cp\u003eOption Forwards 353\u003c\/p\u003e \u003cp\u003eNondeliverable Forwards 356\u003c\/p\u003e \u003cp\u003eRange Forwards 357\u003c\/p\u003e \u003cp\u003eFutures Markets 357\u003c\/p\u003e \u003cp\u003eHedging Using Currency Futures 357\u003c\/p\u003e \u003cp\u003eA Selling Hedge 357\u003c\/p\u003e \u003cp\u003eA Buying Hedge 358\u003c\/p\u003e \u003cp\u003eExchange-Traded Foreign Currency Options 359\u003c\/p\u003e \u003cp\u003eSpeculating with FOREX Options 359\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Garman-Kohlhagen Model \u003c\/i\u003e360\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePut-Call Parity \u003c\/i\u003e361\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Binomial Model \u003c\/i\u003e361\u003c\/p\u003e \u003cp\u003eExchange Rates and Competitiveness 363\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Mortgages and Mortgage-backed Securities 364\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 364\u003c\/p\u003e \u003cp\u003eMarket Participants 364\u003c\/p\u003e \u003cp\u003eMortgage Origination 364\u003c\/p\u003e \u003cp\u003e\u003ci\u003eIncome for the Originator \u003c\/i\u003e365\u003c\/p\u003e \u003cp\u003e\u003ci\u003eMortgage Servicing \u003c\/i\u003e365\u003c\/p\u003e \u003cp\u003e\u003ci\u003eEscrow Accounts \u003c\/i\u003e365\u003c\/p\u003e \u003cp\u003e\u003ci\u003eIncome for the Servicer \u003c\/i\u003e365\u003c\/p\u003e \u003cp\u003e\u003ci\u003eMortgage Insurance \u003c\/i\u003e366\u003c\/p\u003e \u003cp\u003e\u003ci\u003eGovernment Insurance and PMI \u003c\/i\u003e366\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSecondary Sales \u003c\/i\u003e366\u003c\/p\u003e \u003cp\u003eRisks in Mortgage Lending 367\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDefault Risk \u003c\/i\u003e367\u003c\/p\u003e \u003cp\u003e\u003ci\u003eLiquidity Risk \u003c\/i\u003e367\u003c\/p\u003e \u003cp\u003e\u003ci\u003eInterest Rate Risk \u003c\/i\u003e367\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePrepayment Risk \u003c\/i\u003e368\u003c\/p\u003e \u003cp\u003eOther Mortgage Structures 369\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAdjustable-Rate Mortgage (ARM) \u003c\/i\u003e369\u003c\/p\u003e \u003cp\u003eOption to Change the Maturity 371\u003c\/p\u003e \u003cp\u003eRate Caps 371\u003c\/p\u003e \u003cp\u003eCarryovers 372\u003c\/p\u003e \u003cp\u003ePayment Caps 372\u003c\/p\u003e \u003cp\u003eNegative Amortization 374\u003c\/p\u003e \u003cp\u003e\u003ci\u003eGraduated Payment Mortgage \u003c\/i\u003e376\u003c\/p\u003e \u003cp\u003e\u003ci\u003eGrowing Equity Mortgages (GEM) \u003c\/i\u003e378\u003c\/p\u003e \u003cp\u003e\u003ci\u003eWAC and WAM \u003c\/i\u003e379\u003c\/p\u003e \u003cp\u003eCalculation ofWAC andWAM 379\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePass-Through Securities \u003c\/i\u003e379\u003c\/p\u003e \u003cp\u003eCash Flows for a Pass-Through 381\u003c\/p\u003e \u003cp\u003ePrepayment Conventions 381\u003c\/p\u003e \u003cp\u003eSingle Month Mortality Rate 382\u003c\/p\u003e \u003cp\u003eAverage Life 388\u003c\/p\u003e \u003cp\u003eCash Flow Yield 389\u003c\/p\u003e \u003cp\u003eANote 390\u003c\/p\u003e \u003cp\u003eConditional Prepayment Rate 390\u003c\/p\u003e \u003cp\u003ePSA Prepayment Benchmark 391\u003c\/p\u003e \u003cp\u003e\u003ci\u003eIllustration of 100 PSA \u003c\/i\u003e392\u003c\/p\u003e \u003cp\u003eAnalysis 393\u003c\/p\u003e \u003cp\u003e\u003ci\u003eIllustration of 200 PSA \u003c\/i\u003e393\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCollateralized Mortgage Obligations \u003c\/i\u003e394\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSequential Pay CMO \u003c\/i\u003e394\u003c\/p\u003e \u003cp\u003eAnalysis – Tranche A 395\u003c\/p\u003e \u003cp\u003eAnalysis – Tranche B 398\u003c\/p\u003e \u003cp\u003eAnalysis – Tranche C 398\u003c\/p\u003e \u003cp\u003eAnalysis – Tranche D 398\u003c\/p\u003e \u003cp\u003eExtension Risk and Contraction Risk 399\u003c\/p\u003e \u003cp\u003eAccrual Bonds 399\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAnalysis \u003c\/i\u003e399\u003c\/p\u003e \u003cp\u003eFloating Rate Tranches 403\u003c\/p\u003e \u003cp\u003eNotional Interest-only Tranche 404\u003c\/p\u003e \u003cp\u003eInterest-only and Principal-only Strips 405\u003c\/p\u003e \u003cp\u003ePAC Bonds 405\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Swaps 411\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 411\u003c\/p\u003e \u003cp\u003eMarket Terminology 415\u003c\/p\u003e \u003cp\u003eKey Dates 415\u003c\/p\u003e \u003cp\u003eInherent Risk 416\u003c\/p\u003e \u003cp\u003eThe Swap Rate 416\u003c\/p\u003e \u003cp\u003eIllustrative Swap Rates 417\u003c\/p\u003e \u003cp\u003eDetermining the Swap Rate 417\u003c\/p\u003e \u003cp\u003eThe Market Method 419\u003c\/p\u003e \u003cp\u003eValuation of a Swap During Its Life 419\u003c\/p\u003e \u003cp\u003eTerminating a Swap 420\u003c\/p\u003e \u003cp\u003eThe Role of Banks in the Swap Market 421\u003c\/p\u003e \u003cp\u003eMotivation for the Swap 421\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSpeculation \u003c\/i\u003e421\u003c\/p\u003e \u003cp\u003e\u003ci\u003eHedging \u003c\/i\u003e422\u003c\/p\u003e \u003cp\u003eComparative Advantage and Credit Arbitrage 422\u003c\/p\u003e \u003cp\u003eSwap Quotations 423\u003c\/p\u003e \u003cp\u003eMatched Payments 424\u003c\/p\u003e \u003cp\u003eAmortizing Swaps 425\u003c\/p\u003e \u003cp\u003eExtendable and Cancelable Swaps 425\u003c\/p\u003e \u003cp\u003eSwaptions 425\u003c\/p\u003e \u003cp\u003eCurrency Swaps 426\u003c\/p\u003e \u003cp\u003eCross-Currency Swaps 427\u003c\/p\u003e \u003cp\u003eValuation 427\u003c\/p\u003e \u003cp\u003eCurrency Risks 429\u003c\/p\u003e \u003cp\u003eHedging with Currency Swaps 429\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Mutual Funds, ETFs, and Pension Funds 430\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 430\u003c\/p\u003e \u003cp\u003ePros and Cons of Investing in a Fund 430\u003c\/p\u003e \u003cp\u003eShares and Units 431\u003c\/p\u003e \u003cp\u003eOpen-end Versus Closed-end Funds 432\u003c\/p\u003e \u003cp\u003ePremium\/Discount of a Closed-End Fund 433\u003c\/p\u003e \u003cp\u003eUnit Trusts 433\u003c\/p\u003e \u003cp\u003eCalculating the NAV 433\u003c\/p\u003e \u003cp\u003eCosts 436\u003c\/p\u003e \u003cp\u003eSales Charges 436\u003c\/p\u003e \u003cp\u003ePrice Quotes 440\u003c\/p\u003e \u003cp\u003eAnnual Operating Expenses 440\u003c\/p\u003e \u003cp\u003eSwitching Fees 441\u003c\/p\u003e \u003cp\u003eDividend Options 441\u003c\/p\u003e \u003cp\u003eTypes of Mutual Funds 443\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCategorization by Nature of Investments \u003c\/i\u003e444\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCategorization by Investment Objectives \u003c\/i\u003e444\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCategorization by Risk Profile \u003c\/i\u003e444\u003c\/p\u003e \u003cp\u003eMoney Market Funds 444\u003c\/p\u003e \u003cp\u003eGilt Funds 445\u003c\/p\u003e \u003cp\u003eDebt Funds 445\u003c\/p\u003e \u003cp\u003eDiversified Debt Funds 445\u003c\/p\u003e \u003cp\u003eFocused Debt Funds 445\u003c\/p\u003e \u003cp\u003eHigh Yield Debt Funds 446\u003c\/p\u003e \u003cp\u003eDebt Funds and Bond Duration 446\u003c\/p\u003e \u003cp\u003eEquity Funds 446\u003c\/p\u003e \u003cp\u003eAggressive Growth Funds 446\u003c\/p\u003e \u003cp\u003eGrowth Funds 447\u003c\/p\u003e \u003cp\u003eSpecialty Funds 447\u003c\/p\u003e \u003cp\u003eSector Funds 447\u003c\/p\u003e \u003cp\u003eOffshore Funds 447\u003c\/p\u003e \u003cp\u003eSmall Cap Equity Funds 447\u003c\/p\u003e \u003cp\u003eOption Income Funds 448\u003c\/p\u003e \u003cp\u003eFund of Funds 448\u003c\/p\u003e \u003cp\u003eEquity Index Funds 448\u003c\/p\u003e \u003cp\u003eValue Funds 448\u003c\/p\u003e \u003cp\u003eEquity Income Funds 448\u003c\/p\u003e \u003cp\u003eBalanced Funds 449\u003c\/p\u003e \u003cp\u003eAsset-Allocation Funds 449\u003c\/p\u003e \u003cp\u003eCommodity Funds 449\u003c\/p\u003e \u003cp\u003eReal Estate Funds 449\u003c\/p\u003e \u003cp\u003eTax-exempt Funds 449\u003c\/p\u003e \u003cp\u003eRisk Categories 450\u003c\/p\u003e \u003cp\u003e\u003ci\u003eLow Level Risk Funds \u003c\/i\u003e450\u003c\/p\u003e \u003cp\u003e\u003ci\u003eModerate Level Risks \u003c\/i\u003e450\u003c\/p\u003e \u003cp\u003e\u003ci\u003eHigh Level Risks \u003c\/i\u003e450\u003c\/p\u003e \u003cp\u003eThe Prospectus 450\u003c\/p\u003e \u003cp\u003eStructure of a Mutual Fund 450\u003c\/p\u003e \u003cp\u003eServices 451\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAutomatic Reinvestment Plan \u003c\/i\u003e451\u003c\/p\u003e \u003cp\u003e\u003ci\u003eContractual Accumulation Plan \u003c\/i\u003e451\u003c\/p\u003e \u003cp\u003e\u003ci\u003eVoluntary Accumulation Plan \u003c\/i\u003e451\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCheckWriting \u003c\/i\u003e452\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSwitching Within a Family of Funds \u003c\/i\u003e452\u003c\/p\u003e \u003cp\u003e\u003ci\u003eVoluntaryWithdrawal Plans \u003c\/i\u003e452\u003c\/p\u003e \u003cp\u003eInvestment Techniques 452\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDollar-cost Averaging \u003c\/i\u003e452\u003c\/p\u003e \u003cp\u003e\u003ci\u003eValue Averaging \u003c\/i\u003e453\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Combined Method \u003c\/i\u003e454\u003c\/p\u003e \u003cp\u003eThe Total Return 455\u003c\/p\u003e \u003cp\u003eComputation of Returns 456\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAnalysis \u003c\/i\u003e457\u003c\/p\u003e \u003cp\u003eTaxation Issues 458\u003c\/p\u003e \u003cp\u003eAlternatives to Mutual Funds 459\u003c\/p\u003e \u003cp\u003e\u003ci\u003eExchange-Traded Funds (ETFs) \u003c\/i\u003e460\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePotential Asset Classes \u003c\/i\u003e461\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSegregated (Separately Managed) Accounts \u003c\/i\u003e461\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePension Plans \u003c\/i\u003e462\u003c\/p\u003e \u003cp\u003eTypes of Plans 462\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDefined Benefit Plans \u003c\/i\u003e462\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDefined Contribution Plans \u003c\/i\u003e463\u003c\/p\u003e \u003cp\u003eIRAs 464\u003c\/p\u003e \u003cp\u003eCash Balance Plans 464\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Orders and Exchanges 465\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eImportant Acronyms 467\u003c\/p\u003e \u003cp\u003eMarket Orders and Limit Orders 467\u003c\/p\u003e \u003cp\u003eThe Limit Price 468\u003c\/p\u003e \u003cp\u003eThe Limit Order Books 468\u003c\/p\u003e \u003cp\u003eIllustration of a Limit Order Book 468\u003c\/p\u003e \u003cp\u003eLimit Orders Versus Market Orders 469\u003c\/p\u003e \u003cp\u003eMarketable Limit Orders 470\u003c\/p\u003e \u003cp\u003eTrade Pricing Rules 471\u003c\/p\u003e \u003cp\u003eStop-Loss and Stop-Limit Orders 472\u003c\/p\u003e \u003cp\u003eTrailing Stop-Loss Orders 473\u003c\/p\u003e \u003cp\u003eMarket to Limit Orders 474\u003c\/p\u003e \u003cp\u003eEquivalence with Options 474\u003c\/p\u003e \u003cp\u003eValidity Conditions 475\u003c\/p\u003e \u003cp\u003eGood Till Canceled (GTC) Orders 475\u003c\/p\u003e \u003cp\u003eGood Till Days Orders 475\u003c\/p\u003e \u003cp\u003eOrders with Quantity Restrictions 476\u003c\/p\u003e \u003cp\u003eA Point on Order Specification 476\u003c\/p\u003e \u003cp\u003eOpen-Outcry Trading Systems 477\u003c\/p\u003e \u003cp\u003eElectronic Markets Versus Open-Outcry Markets 478\u003c\/p\u003e \u003cp\u003eCall Markets 479\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 The Macroeconomics of Financial Markets 481\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eEconomic Growth 481\u003c\/p\u003e \u003cp\u003eGross Domestic Product 481\u003c\/p\u003e \u003cp\u003e\u003ci\u003eConsumption \u003c\/i\u003e482\u003c\/p\u003e \u003cp\u003e\u003ci\u003eReal Estate \u003c\/i\u003e482\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCapital Expenditure \u003c\/i\u003e483\u003c\/p\u003e \u003cp\u003e\u003ci\u003eGovernment Spending \u003c\/i\u003e483\u003c\/p\u003e \u003cp\u003e\u003ci\u003eInventories \u003c\/i\u003e483\u003c\/p\u003e \u003cp\u003e\u003ci\u003eForeign Trade \u003c\/i\u003e483\u003c\/p\u003e \u003cp\u003eGDP Versus GNP 484\u003c\/p\u003e \u003cp\u003eInflation Adjustment 485\u003c\/p\u003e \u003cp\u003eTransnational Comparisons 485\u003c\/p\u003e \u003cp\u003eThe Big Mac Index 485\u003c\/p\u003e \u003cp\u003eInflation 485\u003c\/p\u003e \u003cp\u003eTypes of Inflation 486\u003c\/p\u003e \u003cp\u003eInterest Rates 488\u003c\/p\u003e \u003cp\u003eThe Federal Budget Deficit 488\u003c\/p\u003e \u003cp\u003eMeasures of Budget Deficits 489\u003c\/p\u003e \u003cp\u003eThe Primary Deficit 490\u003c\/p\u003e \u003cp\u003eFiscal Policy 490\u003c\/p\u003e \u003cp\u003eBudget Deficits and the Capital Market 490\u003c\/p\u003e \u003cp\u003eThe Role of the Central Bank 490\u003c\/p\u003e \u003cp\u003eBudget Deficits and Monetary Policy 491\u003c\/p\u003e \u003cp\u003eCross Border Borrowing 491\u003c\/p\u003e \u003cp\u003eCentral Banks and Foreign Exchange Markets 492\u003c\/p\u003e \u003cp\u003eSterilized and Unsterilized Interventions 493\u003c\/p\u003e \u003cp\u003eExchange Rates 493\u003c\/p\u003e \u003cp\u003eIssues with a Reserve Currency 494\u003c\/p\u003e \u003cp\u003eCross-border Implications of Central Bank Actions 494\u003c\/p\u003e \u003cp\u003eQuantitative Easing 495\u003c\/p\u003e \u003cp\u003eQuantitative Easing Versus Open-market Operations 496\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 Interest Rate Derivatives 497\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eForward Rate Agreements (FRAs) 497\u003c\/p\u003e \u003cp\u003eSettling an FRA 499\u003c\/p\u003e \u003cp\u003eDetermining Bounds for the FRA Rate 499\u003c\/p\u003e \u003cp\u003eEurodollar Futures 500\u003c\/p\u003e \u003cp\u003eCalculating Profits and Losses on ED Futures 501\u003c\/p\u003e \u003cp\u003eLocking in a Borrowing Rate 502\u003c\/p\u003e \u003cp\u003eLocking in a Lending Rate 503\u003c\/p\u003e \u003cp\u003eThe No-Arbitrage Pricing Equation 505\u003c\/p\u003e \u003cp\u003eCreating a Fixed-rate Loan 506\u003c\/p\u003e \u003cp\u003e30-year T-bond Futures Contracts 507\u003c\/p\u003e \u003cp\u003eConversion Factors 507\u003c\/p\u003e \u003cp\u003eInterest Rate Options 510\u003c\/p\u003e \u003cp\u003eState Prices 510\u003c\/p\u003e \u003cp\u003eCallable and Putable Bonds 511\u003c\/p\u003e \u003cp\u003eCaps, Floors, and Collars 512\u003c\/p\u003e \u003cp\u003eCaptions and Floortions 513\u003c\/p\u003e \u003cp\u003eSources and References 515\u003c\/p\u003e \u003cp\u003eIndex 521\u003c\/p\u003e \u003cp\u003e\u003cb\u003eSUNIL PARAMESWARAN,\u003c\/b\u003e PhD, is Director and CEO of Tarheel Consultancy Services, a corporate training and management consulting firm. His professional expertise includes securities markets, financial derivatives, fixed income securities, and international finance. He obtained his doctorate from the Fuqua School of Business at Duke University in North Carolina, USA.\u003c\/p\u003e \u003cp\u003eA comprehensive introduction to the full range of financial products commonly used in the financial markets, the newly revised Second Edition of \u003ci\u003eFundamentals of Financial Instruments: An Introduction to Stocks, Bonds, Foreign Exchange, and Derivatives\u003c\/i\u003e delivers a crystal-clear and intuitive exploration of basic and complex instruments. Along with explanations of the instruments themselves, author Sunil K. Parameswaran describes the dynamics of the free market and discusses the environment in which financial instruments are traded.\u003c\/p\u003e \u003cp\u003eThe book offers supplementary and ancillary materials to enhance reader’s opportunities to apply the material presented within. Foundational treatments of macroeconomic and corporate finance concepts, like interest rates and the time value of money, are included as well. The book employs a straightforward approach and style but does not shy away from more complex topics when necessary for a full understanding of the subject. \u003c\/p\u003e\u003cp\u003eClear discussions of introductory topics are followed by explorations of more advanced subjects, like equity and preferred shares, bonds, money market instruments, foreign exchange products, derivatives, mortgage-backed securities, and swaps. \u003c\/p\u003e\u003cp\u003eThe latest edition of this leading text includes entirely new chapters on interest rate derivatives and bonds with embedded options, financial macroeconomics, mutual funds, exchange-traded funds, pension plans, orders, and exchanges. It also demonstrates useful Excel functions for finance practitioners and students. \u003c\/p\u003e\u003cp\u003eAn indispensable resource for finance professionals and students, as well as undergraduate and graduate students of business, \u003ci\u003eFundamentals of Financial Instruments: An Introduction to Stocks, Bonds, Foreign Exchange, and Derivatives\u003c\/i\u003e will also earn a place on the bookshelves of banking professionals and students of executive education programs.  \u003c\/p\u003e\u003cp\u003e\u003cb\u003eFUNDAMENTALS \u003csmall\u003eOF\u003c\/small\u003e FINANCIAL INSTRUMENTS\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eAn accessible, one-stop reference for students and professionals\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003eThe thoroughly updated Second Edition of \u003ci\u003eFundamentals of Financial Instruments: An Introduction to Stocks, Bonds, Foreign Exchange, and Derivatives\u003c\/i\u003e is the leading, one-stop reference for students and professionals interested in exploring foundational and advanced topics in financial instruments. Including coverage of essential economic theory and the structure of the market, the book begins with explorations of basic financial instruments and concepts before moving on to more advanced material on equity, preferred shares, bonds, money market instruments, foreign exchange products, derivatives, mortgage-backed securities, and swaps. \u003c\/p\u003e\u003cp\u003eThe latest edition offers new material on interest rate derivatives, bonds with embedded options, mutual funds, ETFs, pension plans, financial macroeconomics, orders, exchanges, and useful Excel functions for finance students and professionals. \u003c\/p\u003e\u003cp\u003eAn ideal resource for students of undergraduate, graduate, and executive programs in business and finance, \u003ci\u003eFundamentals of Financial Instruments\u003c\/i\u003e will be invaluable for banking and finance professionals seeking to fortify their understanding of the foundations of finance. This standalone resource is also a powerful accompaniment to popular textbooks used in courses like financial derivatives, fixed income securities, and international finance.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989259141349,"sku":"NP9781119816614","price":89.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781119816614.jpg?v=1761783413","url":"https:\/\/k12savings.com\/es\/products\/fundamentals-of-financial-instruments-isbn-9781119816614","provider":"K12savings","version":"1.0","type":"link"}