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Zvi Bodie, Alex Kane, and Alan J. Marcus (8th ed 2008, originally 1989)

Why Read It?

Introduces financial concepts, markets, and instruments; shows how to develop a basic finance toolbox, and how to apply it in a portfolio setting. Analyzes all the core concepts in investment, and explains market structure and environment. Blends practical and theoretical coverage, and is useful for those wanting to develop a greater knowledge of portfolio theory.

Getting Started
Investments, now in its eighth edition, is an introductory textbook that focuses on the practical aspects of investing and investment strategy. It is the leading textbook for the graduate/MBA investments market, as it gives a good overview of investment techniques and opportunities, and offers a comprehensive analysis of investment theory and the concepts involved.

Zvi Bodie is Professor of Management at Boston University, and has served on the finance faculty at the Harvard Business School and MIT Sloan School of Management. He has published widely on pension finance and investment strategy. Alex Kane is Professor of Finance and Economics at the School of International Relations and Pacific Studies, University of California, San Diego. He is a member of the American Economic Association and the American Finance Association, and has held academic appointments at UCLA and Harvard. Alan J. Marcus is Professor of Finance at the School of Management, Boston College. He also currently serves on the Research Foundation Advisory Board of the CFA Institute.

Communicates complex investment concepts to those with little or no background in finance. Helps you understand, analyze, and utilize all the major investment tools. Discusses concepts such as derivatives, which can alter the characteristics of portfolios. Examines why the security markets are nearly efficient, and how this ensures that securities are priced appropriately, given their risk and return attributes. Balances theory and application of both the basics and advanced topics, and explains the pros and cons of various financial models. Although not overly technical, does assume some basic mathematical knowledge.

Introduces the most basic financial concepts that are used in portfolio construction and management. Emphasizes asset allocation, and provides a broader assessment of futures, options, and other derivative security markets than most investment texts. Not for those wanting a deep understanding of the background research that developed the theories. Provides a variety of real-life examples to supplement their explanations, which provides context for some of the abstract concepts. Contains helpful guidance for the Professional Risk Manager Certification, and is used in the certification programs of the Financial Planning Association and the Society of Actuaries.
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When complex derivatives are misunderstood, firms that believe they are hedging might in fact be increasing their exposure to various sources of risk. Securities in the capital market are much more diverse than those found within the money market. For some firms, macroeconomic and industry circumstances might have a greater influence on profits than the firms relative performance within its industry.

More Info
Bodie, Zvi, Alex Kane, and Alan J. Marcus. Student Solutions Manual to Accompany Investments. New York: Irwin/McGraw-Hill, 2006. Brown, Keith, and Frank K. Reilly. Investment Analysis and Portfolio Management. Hinsdale, IL: Dryden Press, 1979. Takes a more quantitative approach to the valuation of various assets and is more comprehensive. Sharpe, William, Gordon J. Alexander, and Jeffrey W. Bailey. Investments. Englewood Cliffs, NJ: Prentice Hall, 1978. More of a technical and detailed coverage of the same topics.

The website for the book includes materials such as spreadsheets directly related to the content:

See Also
Information Sources Investment

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