【正文】 CHAPTER 1 The Investment Environment What is an Investment ? ―An Investment is the current mitment of money or other resources in the expectation of reaping future benefits‖ Real Assets Versus Financial Assets ? Real Assets ? Assets used to produce goods and services (land, buildings, machine, knowledge or patents etc.) ? Financial Assets ? Claims on real assets (Stocks, Bonds etc.) The success and failure of financial assets we choose to purchase ultimately depend on the performance of the underlying real assets Types Financial Assets ? Fixed ine or debt ? Money market instruments ? Bank certificates of deposit ? Capital market instruments ? Bonds ? Common stock or equity ? Derivative securities Allocation vs. Selection ? Asset allocation ? Choice among broad asset classes ? Choice of sector within a particular asset class ? Security selection ? Choice of which securities to hold within asset class Active vs. Passive Management ? Active Management ? Finding mispriced securities ? Timing the market ? Passive Management ? No attempt to find undervalued securities ? No attempt to time the market ? Holding a highly diversified portfolio Risk and Return Tradeoff * P o r t f o l i o C* P o r t f o l i o A 39。 39。* P o r t f o l i o B* P o r t f o l i o A 39。* P o r t f o l i o AR i s k ( S t a n d a r d D e v i a t i o n )Rate of ReturnsU . S . T r e a s u r yEf fic ie n t F ro n tie rM o r e R i s kHigher ReturnsXZY―NoFree Lunch Proposition‖ Primary vs. Secondary Market ? New issues of securities are offered to the public in the primary market. IPOs – Initial Public Offerings ? Previously issued securities are then traded in the secondary market Market Trends ? American Depository Receipts (ADRs) ? Foreign securities offered in dollars ? Mutual funds that invest internationally ? Instruments and vehicles continue to develop (WEBs) ? Exchange Traded Funds (ETFs) Recent Trends—Securitization ? Mortgage passthrough securities ? Other passthrough arrangements ? Car, student, home equity, credit card loans ? Offers opportunities for investors and originators Recent Trends—Financial Engineering ?Use of mathematical models and puterbased trading technology to synthesize new financial products ?Bundling and unbundling of cash flows Recent Trends—Computer Networks ? Online information dissemination ? Information is made cheaply and widely available to the public ? Automated trade crossing ? Direct trading among investors TED Spread The spread between LIBOR rate (Bank borrowing Rate) and TBill (. Gov’t borrowing Rate) is a measure of credit risk in the market place. The Financial Crisis ? World financial markets have suffered very large, acrossthe board declines in value. ? Unprecedented declines in residential property values have been experienced in many countries ? The banking systems of most Western countries have been in plete disarray, requiring huge government interventions ? A global recession is ongoing, with large negative effects impacting employment, trade and government revenues ? Previously active markets in securitized debt, and related credit risk transfer instruments, have ground to a halt CHAPTER 2 Asset Classes and Financial Investments Two Segments of Financial Markets I. Money market – Shortterm, marketable, liquid, lowrisk debt securi