Front Matter 1
Preface 1
Walk Through 9

I. Introduction 13
1. The Investment Environment 13
2. Markets and Instruments 38
3. How Securities Are Traded 75
4. Mutual Funds and Other Investment Companies 114
5. History of Interest Rates and Risk Premiums 142

II. Portfolio Theory 163
6. Risk and Risk Aversion 163
7. Capital Allocation between the Risky Asset and the Risk−Free Asset 192
8. Optimal Risky Portfolio 216

III. Equilibrium In Capital Markets 266
9. The Capital Asset Pricing Model 266
10. Single−Index and Multifactor Models 300
11. Arbitrage Pricing Theory 328
12. Market Efficiency 348
13. Empirical Evidence on Security Returns 390

IV. Fixed−Income Securities 421
14. Bond Prices and Yields 421
15. The Term Structure of Interest Rates 459
16. Managing Bond Portfolios 489

V. Security Analysis 537
17. Macroeconomics and Industry Analysis 537
18. Equity and Valuation Models 567
19. Financial Statement Analysis 611

VI. Options, Futures, and Other Derivatives 652
20. Options Markets: Introduction 652
21. Option Valuation 700
22. Futures Markets 743
23. Futures and Swaps: A Closer Look 770

VII. Active Portfolio Management 808
24. Portfolio Performance Evaluation 808
25. International Diversification 850
26. The Process of Portfolio Management 875