Investments BKM Ch 1 Zvi Wiener 02 588

Investments, BKM Ch 1 Zvi Wiener 02 -588 -3049 mswiener@mscc. huji. ac. il Fall-02 http: //pluto. mscc. huji. ac. il/~mswiener/zvi. html Investments

Main Textbook Bodie, Kane, Marcus, Investments, Irwin Mc. Graw-Hill, 5 edition Following economic and financial news is important! Zvi Wiener BKM Ch 1 2

Part 1: Introduction 1. The Investment Environment 2. Markets and Instruments 3. How Securities are Traded 4. Mutual Funds and Other Investment Companies 5. History of Interest Rates and Risk Premiums Zvi Wiener BKM Ch 1 3

Part 2: Portfolio Theory 6. Risk and Risk Aversion 7. Capital Allocation Between the Risky Asset and the Risk-Free Asset 8. Optimal Risky Portfolios Zvi Wiener BKM Ch 1 4

Part 3: Equilibrium in Capital Markets 9. The Capital Asset Pricing Model 10. Single-Index and Multifactor Models 11. Arbitrage Pricing Theory 12. Market Efficiency 13. Empirical Evidence on Security Returns Zvi Wiener BKM Ch 1 5

Part 4: Fixed-Income Securities 14. Bond Prices and Yields 15. The Term Structure of Interest Rates 16. Fixed-Income Portfolio Management Zvi Wiener BKM Ch 1 6

Part 5: Security Analysis 17. Macroeconomic and Industry Analysis 18. Equity Valuation Models 19. Financial Statement Analysis Zvi Wiener BKM Ch 1 7

Part 6: Options, Futures, and Other Derivatives 20. Options Markets: Introduction 21. Option Valuation 22. Futures Markets 23. Futures and Swaps: A Closer Look Zvi Wiener BKM Ch 1 8

Part 7: Applied Portfolio Management 24. Portfolio Performance Evaluation 25. International Diversification 26. The Process of Portfolio Management 27. Theory of Active Portfolio Management Zvi Wiener BKM Ch 1 9

If you need additional Assistance 1. Look in the book/slides. 2. Send an e-mail to the TA. 3. Request a further explanation in the help session. 4. Send an e-mail to me with a copy of the answer you got from the TA. If you need to meet with me, please send me an e-mail with your name and a short description of the question you have. I will set up an appointment and try to resolve the problem. Zvi Wiener BKM Ch 1 10

Common courses: math, accounting, law, economics Introduction to Finance Corporate Finance Investments Financial Intermediaries Derivatives Government and Finance Risk Management Investment Banking Zvi Wiener BKM Ch 1 11

Real assets are used to produce goods and services. Land, building, machines, knowledge, goodwill, etc. Financial assets are claims on real assets or their income. Stock, money, bond, option. Zvi Wiener BKM Ch 1 12

Groups of Users Individuals (Households) Companies (Business Sector) Government and Agencies Zvi Wiener BKM Ch 1 13

Companies Non Financial Companies Financial Intermediaries both assets and liabilities are financial assets exists because small investors are limited Zvi Wiener BKM Ch 1 14

Financial Intermediaries Commercial Banks Investment Banks Exchanges Pension Funds Insurance Companies Credit Card Companies Mortgage Companies S&L, Credit Unions BKM Ch 1 Zvi Wiener 15

Government Budget Spending Regulator of Banks Interest Rates (FED) Tax Authorities Insurance very good credit rating - low risk Zvi Wiener BKM Ch 1 16

Types of Markets Direct Search Markets Brokered Markets Dealer Markets Auction Markets Zvi Wiener BKM Ch 1 17

Ongoing Trends Globalization Securitization Credit Enhancement Financial Engineering Zvi Wiener BKM Ch 1 18

Summary real assets and financial assets households, businesses, and government diverse risk and tax preferences financial intermediaries direct search, brokered, dealer, auction stockholders own the companies, bondholders lend money Zvi Wiener BKM Ch 1 19

Markets and Instruments Money Market (up to 1 year to maturity) The Fixed-Income Capital Market Equity Securities Stock and Bond Market Indexes Derivative Markets Zvi Wiener BKM Ch 1 20

Home Assignment Chapter 1 Questions 2, 10, 14 Visits the Internet site of the TA stock exchange. What is MAYA? What type of information one can find there? Zvi Wiener BKM Ch 1 21