1;Preface;5 2;Contents;7 3;Contributors;10 4;I Introduction to Securities Markets and Investment Management;15 4.1;Introduction;16 4.2;Introduction to Market Microstructure;25 4.3;An Overview of Securities Market Regulation Around theWorld;42 5;II Financial Theories;57 5.1;The Capital Asset Pricing Model and Arbitrage Pricing Theory: Theory;58 5.2;The Capital Asset Pricing Model and Arbitrage Pricing Theory: Tests and Application;90 6;III Financial Statements and Equity Prices;115 6.1;Accounting and Financial Analysis;116 6.2;The Use (and Misuse) of Cash Flow Statements;145 6.3;Prospective Analysis: Guidelines for Forecasting Financial Statements;161 7;IV Valuation Models;230 7.1;The EVA Approach to Investing;231 7.2;DCF Valuation Models: Free Cash Flow, APV, ECF, and CCF Valuation Models;244 7.3;Valuation Using Multiples;264 7.4;Real Options Perspective of Security Analysis*;285 7.5;Investing in Initial Public Offerings and Depository Receipts;300 8;V Equity Options;320 8.1;Pricing Equity Options;321 8.2;Investing in Exotic Options;358 9;VI Fixed Income and Credit Sensitive Instruments;380 9.1;An Overview of Fixed Income Securities and Markets;381 9.2;Investing in Convertibles, Preferred Stocks, andWarrants;402 9.3;Managing Fixed Income Portfolios;436 9.4;Interest Rate Derivatives;449 9.5;The Credit Market;467 9.6;Investing in Credit Derivatives;478 10;VII Active Investments and Market Efficiency;490 10.1;Market Efficiency: Theory, Tests, and Applications;491 10.2;An Overview of Mutual Funds and Exchange Traded Funds;510 10.3;Understanding Active Portfolio Management;532 10.4;Measuring Mutual Fund Performance;559 10.5;Hedge Funds;580 10.6;Investing in Emerging Markets;601 11;VIII Behavioral Finance and Summary;615 11.1;Behavioral Finance and Investment Strategy;616