cover -- copyright page -- title page -- Contents -- Preface -- To students -- Examples -- Problems -- Special Features -- Coverage -- Second edition -- Financial transactions -- Acknowledgments -- Contacting the authors -- 0 An introduction to the Texas Instruments BA II Plus -- 0.1 CHOOSING A CALCULATOR -- 0.2 FONT CONVENTION -- 0.3 BA II PLUS BASICS -- 0.4 PROBLEMS, CHAPTER 0 -- 1 The growth of money -- 1.1 INTRODUCTION -- 1.2 WHAT IS INTEREST ? -- 1.3 ACCUMULATION AND AMOUNT FUNCTIONS -- 1.4 SIMPLE INTEREST / LINEAR ACCUMULATION FUNCTIONS -- 1.5 COMPOUND INTEREST (THE USUAL CASE!) -- 1.6 INTEREST IN ADVANCE / THE EFFECTIVE DISCOUNT RATE -- 1.7 DISCOUNT FUNCTIONS / THE TIME VALUE OF MONEY -- 1.8 SIMPLE DISCOUNT -- 1.9 COMPOUND DISCOUNT -- 1.10 NOMINAL RATES OF INTEREST AND DISCOUNT -- 1.11 A FRIENDLY COMPETITION (CONSTANT FORCE OF INTEREST) -- 1.12 FORCE OF INTEREST -- 1.13 NOTE FOR THOSE WHO SKIPPED SECTIONS (1.11) AND (1.12) -- 1.14 INFLATION -- 1.15 PROBLEMS, CHAPTER 1 -- 1.3) Accumulation and amount functions -- (1.4) Simple interest -- (1.5) Compound interest -- (1.6) Effective discount rates/ Interest in advance -- (1.7) Discount functions/ The time value of money -- (1.8) Simple discount -- (1.9) Compound discount -- (1.10) Nominal rates of interest and discount -- (1.11) A friendly competition (Constant force of interest) -- (1.12) Force of interest -- (1.13) Note for those who skipped Section (1.11) and (1.12) -- (1.14) Inflation -- Chapter 1 review problems -- 2 Equations of value and yield rates -- 2.1 INTRODUCTION -- 2.2 EQUATIONS OF VALUE FOR INVESTMENTS INVOLVING A SINGLE DEPOSIT MADE UNDER COMPOUND INTEREST -- 2.3 EQUATIONS OF VALUE FOR INVESTMENTS WITH MULTIPLE CONTRIBUTIONS -- 2.4 INVESTMENT RETURN -- 2.5 REINVESTMENT CONSIDERATIONS -- 2.6 APPROXIMATE DOLLAR-WEIGHTED YIELD RATES -- 2.7 FUND PERFORMANCE.

2.8 PROBLEMS, CHAPTER 2 -- (2.0) Chapter 2 writing problems -- (2.2) Equations of value for investments involving a single deposit made under compound interest -- 2.3) Equations of value for investments with multiple contributions -- (2.4) Investment return -- (2.5) Reinvestment considerations -- (2.6) Approximate dollar-weighted yield rates -- (2.7) Fund performance -- Chapter 2 review problems -- 3 Annuities (annuities certain) -- 3.1 INTRODUCTION -- 3.2 ANNUITIES - IMMEDIATE -- 3.3 ANNUITIES -DUE -- 3.4 PERPETUITIES -- 3.5 DEFERRED ANNUITIES AND VALUES ON ANY DATE -- 3.6 OUTSTANDING LOAN BALANCES -- 3.7 NONLEVEL ANNUITIES -- 3.8 ANNUITIES WITH PAYMENTS IN GEOMETRIC PROGRESSION -- 3.9 ANNUITIES WITH PAYMENTS IN ARITHMETIC PROGRESSION -- 3.10 YIELD RATE EXAMPLES INVOLVING ANNUITIES -- 3.11 ANNUITY SYMBOLS FOR NONINTEGRAL TERMS -- 3.12 ANNUITIES GOVERNED BY GENERAL ACCUMULATION FUNCTIONS -- 3.13 THE INVESTMENT YEAR METHOD -- 3.14 PROBLEMS, CHAPTER 3 -- (3.0) Chapter 3 writing problems -- (3.2) Annuities-immediate -- (3.3) Annuities-due -- (3.4) Perpetuities -- 3.5) Deferred annuities and annuity values on any date -- (3.6) Outstanding loan balances -- (3.7) Nonlevel annuities -- (3.8) Annuities with payments in geometric progressions -- (3.9) Annuities with payments in arithmetic progressions -- (3.10) Yield rate examples involving annuities -- (3.11) Annuity-symbols for nonintegral terms -- (3.12) Annuities governed by general accumulation functions -- (3.13) The investment year Method -- Chapter 3 review problems -- 4 Annuities with different payment and conversion periods -- 4.1 INTRODUCTION -- 4.2 LEVEL ANNUITIES WITH PAYMENTS LESS FREQUENT THAN EACH INTEREST PERIOD -- 4.3 LEVEL ANNUITIES WITH PAYMENTS MORE FREQUENT THAN EACH INTEREST PERIOD.

4.4 ANNUITIES WITH PAYMENTS LESS FREQUENT THAN EACH INTEREST PERIOD AND PAYMENTS IN ARITHMETIC PROGRESSION -- 4.5 ANNUITIES WITH PAYMENTS MORE FREQUENT THAN EACH INTEREST PERIOD AND PAYMENTS IN ARITHMETIC PROGRESSION -- 4.6 CONTINUOUSLY PAYING ANNUITIES -- 4.7 A YIELD RATE EXAMPLE -- 4.8 PROBLEMS, CHAPTER 4 -- (4.0) Chapter 4 writing problems -- (4.2) Level annuities with payments less frequent than each interest period -- (4.3) Level annuities with payments more frequent than each interest period -- (4.4) Annuities with payments less frequent than each interest period and payments in arithmetic progression -- (4.5) Annuitieswith payments more frequent than each interest period and payments in arithmetic progression -- (4.6) Continuously paying annuities -- (4.7) A yield rate example -- Chapter 4 review problems -- 5 Loan repayment -- 5.1 INTRODUCTION -- 5.2 AMORTIZED LOANS AND AMORTIZATION SCHEDULES -- 5.3 THE SINKING FUND METHOD -- 5.4 LOANS WITH OTHER REPAYMENT PATTERNS -- 5.5 YIELD RATE EXAMPLES AND REPLACEMENT OF CAPITAL -- 5.6 PROBLEMS, CHAPTER 5 -- (5.0) Chapter 5 writing problems -- (5.2) Amortized loans and amortization schedules -- (5.3) The sinking fund method -- (5.4) Loans with other repayment patterns -- (5.5) Yield rate examples and replacement of capital -- Chapter 5 review problems -- 6 Bonds -- 6.1 INTRODUCTION -- 6.2 BOND ALPHABET SOUP AND THE BASIC PRICE FORMULA -- 6.3 THE PREMIUM-DISCOUNT FORMULA -- 6.4 OTHER PRICING FORMULAS FOR BONDS -- 6.5 BOND AMORTIZATION SCHEDULES -- 6.6 VALUING A BOND AFTER ITS DATE OF ISSUE -- 6.7 SELLING A BOND AFTER ITS DATE OF ISSUE -- 6.8 YIELD RATE EXAMPLES -- 6.9 CALLABLE BONDS -- 6.10 FLOATING-RATE BONDS -- 6.11 THE BA II PLUS CALCULATOR BOND WORKSHEET -- 6.12 PROBLEMS, CHAPTER 6 -- (6.0) Chapter 6 writing problems -- (6.2) Bond alphabet soup and the basic price formula.

(6.3) The premium-discount formula -- (6.4) Other pricing formulas for bonds -- (6.5) Bond amortization schedules -- (6.6) Valuing a bond after its date of issue -- (6.7) Selling a bond after its date of issue -- (6.8) Yield rate examples -- (6.9) Callable bonds -- (6.10) Floating-rate bonds -- (6.11) The BAII Plus calculator Bond worksheet -- Chapter 6 review problems -- 7 Stocks and financial markets -- 7.1 COMMON AND PREFERRED STOCK -- 7.2 BROKERAGE ACCOUNTS -- 7.3 GOING LONG: BUYING STOCK WITH BORROWED MONEY -- 7.4 SELLING SHORT: SELLING BORROWED STOCKS -- 7.5 PROBLEMS, CHAPTER 7 -- (7.0) Chapter 7 writing problems -- (7.1) Common and preferred stock -- (7.2) Brokerage accounts -- (7.3) Going long: buying stock with borrowed money -- (7.4) Selling short: selling borrowed stocks -- Chapter 7 review problems -- 8 Arbitrage, the term structure of interest rates, and derivatives -- 8.1 INTRODUCTION -- 8.2 ARBITRAGE -- 8.3 THE TERM STRUCTURE OF INTEREST RATES -- 8.4 FORWARD CONTRACTS -- 8.5 COMMODITY FUTURES HELD UNTIL DELIVERY -- 8.6 OFFSETTING POSITIONS AND LIQUIDITY OF FUTURES CONTRACTS -- 8.7 PRICE DISCOVERY AND MORE KINDS OF FUTURES -- 8.8 OPTIONS -- 8.9 USING REPLICATING PORTFOLIOS TO PRICE OPTIONS -- 8.10 USING WEIGHTED AVERAGES TO PRICE OPTIONS -- 8.11 SWAPS -- 8.12 PROBLEMS, CHAPTER 8 -- (8.0) Chapter 8 writing problems -- (8.2) Arbitrage -- (8.3) The term structure of interest rates -- (8.4) Forward contracts -- (8.5) Commodity futures held until delivery -- (8.6) Offsetting positions and liquidity of futures contracts -- (8.7) Price discovery and more kinds of futures -- (8.8) Options -- (8.9) Using replicating portfolios to price options -- (8.10) Using weighted averages to price options: risk-neutral probabilities -- (8.11) Swaps -- Chapter 8 review problems -- 9 Interest rate sensitivity -- 9.1 OVERVIEW -- 9.2 DURATION.

9.3 CONVEXITY -- 9.4 IMMUNIZATION -- 9.5 OTHER TYPES OF DURATION -- 9.6 PROBLEMS, CHAPTER 9 -- (9.0) Chapter 9 writing problems -- (9.1) Overview -- (9.2) Macaulay and modified duration -- (9.3) Convexity -- (9.4) Immunization -- (9.5) Other types of duration -- Chapter 9 review problems -- Appendix A Some useful formulas -- Appendix B Answers to end of chapter problems -- PROBLEMS, CHAPTER 0 -- PROBLEMS, CHAPTER 1 -- PROBLEMS, CHAPTER 2 -- PROBLEMS, CHAPTER 3 -- PROBLEMS, CHAPTER 4 -- PROBLEMS, CHAPTER 5 -- PROBLEMS, CHAPTER 6 -- PROBLEMS, CHAPTER 7 -- PROBLEMS, CHAPTER 8 -- PROBLEMS, CHAPTER 9 -- Bibliography -- Index -- About the Authors.