EQUITY MARKETS AND PORTFOLIO ANALYSIS -- Contents -- Preface -- Content -- Acknowledgments -- 1 Overview of the Financial System -- Real and Financial Assets -- Types of Equity Claims -- Types of Debt Claims -- Financial Markets -- Types of Financial Markets -- Primary and Secondary Markets -- Direct and Intermediate Financial Markets -- Money and Capital Markets -- Foreign Security Markets -- Spot, Futures, Options, and Swap Markets -- Gold and Precious Metals -- Regulations -- Identification -- Efficient Financial Markets -- Characteristics of Assets -- Value -- Rate of Return -- Risk -- Life -- Divisibility -- Marketability -- Liquidity -- Taxability -- Indexes -- Conclusion -- Web Site Information -- Notes -- Selected References -- 2 Overview and Guide to the Bloomberg System -- Introduction -- Bloomberg System-Bloomberg Keyboard -- Uploading Information on a Stock, Bond, Currency, or Index -- Accessing Some of the Information Discussed in Chapter 1 -- Bloomberg Menu for a Stock: Ticker -- Bloomberg Corporate Bond Information and Functions: Ticker -- Bloomberg Government Bond Information and Functions: Ticker GOVT -- Finding Other Security Types -- Indexes -- Functionality -- Financial Analysis: FA -- Relative Valuation: RV -- Fundamental Graphs: GF -- Economic, Industry, Law, and Municipal Information Screens -- Economic Information Screens: ECOF, ECO, and ECST -- Sector and Industry Information: BI -- Municipal Screens -- Legal Information: BLAW -- Monitor and Portal Screens -- Bond Monitors: FIT, WB, RATT, RATC, CSDR, IM, and BTMM -- Stock Monitors: WEI, IMAP, MMAP, and MOST -- New Bond and Equity Offerings: NIM and IPO -- COUN and BTMM: Country Information Indicators -- Calendar Screens -- Portfolios and Baskets -- Portfolio Construction and Analysis: PRTU and PMEN -- Creating Baskets: CIXB.

Screening and Search Functions -- Equity Screener Analysis: EQS -- Other Search Screens: Fund Searches (FSRC), Bond Searches (SRCH), Municipal Bond Searches (MSRC), and News Searches (NI) -- The Bloomberg Excel Add-In: Importing Bloomberg into Excel -- Import Data Wizard -- Fundamental Analysis Wizard -- Template Library -- Launchpad -- Other Bloomberg Functions -- Conclusion -- Bloomberg Exercises -- 3 Stock and Bond Valuation and Return -- Introduction -- Rate of Return -- Holding Period Yield -- Annualized HPY -- Required Rates of Return and Value for a Single-Period Cash Flow -- Future and Present Values -- Future Value -- Future Value of an Annuity -- Present Value -- Present Value of an Annuity -- Bond Valuation -- Bond Price Relations -- Valuing Bonds with Different Cash Flows and Compounding Frequencies -- The Yield to Maturity and Other Rates of Return Measures for Bonds -- Common Measures of Rates of Return -- Yield to Maturity -- Yield to Call, Yield to Put, and Yield to Worst -- Bond Portfolio Yields -- Rate on Zero-Coupon Bond -- Total Return -- Spot Rates and Equilibrium Prices -- Geometric Mean -- Implied Forward Rate -- Stock Valuation and Return -- Stock Returns -- Stock Valuation -- Fundamental Stock Valuation -- Two-Stage and Three-Stage Growth Models -- The Bloomberg Three-Stage Growth Model-DDM -- DDM Example -- Valuation of Preferred Stock -- Conclusion -- Web Site Information -- Note -- Selected References -- Bloomberg Exercises -- 4 Equity Securities, Markets, and Trading -- Introduction -- Types of Equity Securities -- Common Stock -- Preferred Stock -- Limited Partnership Shares -- Private Equity Investments -- How Stocks and other Securities are Traded-Primary Market -- Open-Market Sales -- Private Placement -- Rights Offering -- The Markets for Existing Securities -- Brokers and Dealers.

Organized Exchanges and the OTC Market -- Convergences of Organized Exchanges, the OTC Market, and the Electronic Communications Networks -- Brief History -- Third Market -- Fourth Markets -- Block Trades -- National Market System -- Trading Securities in the Market -- Organized Exchanges-Physical Exchange -- OTC Trading -- Electronic Trading -- Trade Execution-Example -- Note on the Secondary Market for Bonds -- Clearinghouse -- Types of Transactions -- Margin Purchases -- Short Sale -- Types of Orders -- Size of the Order -- Price Limits of the Order -- Time Limits of the Order -- Stop Order -- Cost of Trading -- Commissions -- Bid-Ask Spread -- Conclusion -- Web Site Information -- NYSE Euronext -- OTC Information -- SEC -- Notes -- Selected References -- Bloomberg Exercises -- 5 Investment Funds, Intermediate Securities, and Global Equity Markets -- Introduction -- Investment Funds -- The Markets for Funds -- Structure of Funds -- Types of Investment Funds -- International Mutual Funds -- Accumulation Plans -- Taxes and Regulations -- Note on Indexes -- Exchange-Traded Funds -- Other Investment-Type Funds and Securities -- Hedge Funds -- Real Estate Investment Trusts -- Mortgage-Backed and Asset-Backed Securities -- Collateralized Debt Obligations -- Insurance Companies, Pension Funds, and Investment Banks -- Insurance Companies' Role in the Financial Market -- Pension Funds -- Investment Banks -- Financial Service Industry, the 2008 Financial Crisis, and Regulations -- Global Equity Markets and Exchanges -- Note on Exchange-Rate Risk -- Differences in Foreign Security Markets -- Tax Considerations -- Global Equity Investments -- Foreign Stocks Listed on Domestic Markets -- New Exchanges, Consolidation, and Global 24-Hour Trading -- American Depository Receipts -- Conclusion -- Web Site Information -- Notes -- Selected References.

Bloomberg Exercises -- 6 Expected Rate of Return and Risk-Stock -- Introduction -- Risk-Free Security, Nominal Rates, and Real Rates -- Stock Risk: Firm, Industry, and Market Risk -- Statistical Measurements of Expected Return and Risk -- Expected Value -- Variance, Standard Deviation, and Coefficient of Variation -- Skewness -- Normal Distribution -- Correlation -- Parameter Estimates: Historical Averages -- Geometric Mean and Arithmetic Mean -- Cumulative Returns -- Parameter Estimates: Regression -- Linear Regression -- Estimating the Regression Coefficients -- Regression Qualifiers -- Regression Examples -- Using as a Measure of Market Risk -- Systematic and Unsystematic Risk -- A Note on Adjusting Betas -- Beta+ and Beta− and Convexity -- Alpha -- Multiple Regression Analysis -- Cross-Sectional Regression Analysis -- Relationship between Return and Risk -- Security Market Line -- Return-Risk Preferences -- Conclusion -- Web Site Information -- Notes -- Selected References -- Bloomberg Exercises -- 7 Portfolio Evaluation -- Introduction -- Portfolio Return and Risk -- Portfolio Expected Return -- Portfolio Risk -- Importance of the Covariance -- Derivation of Portfolio Variance Equation -- Alternative Portfolio Variance Expressions -- Example -- Portfolio Risk and Size Relation -- Return and Risk of a Portfolio of Risky Stocks and a Risk-Free Security -- Borrowing and Lending Portfolios -- Return-Risk Relation -- Portfolio Ranking -- Portfolio Performance Measures -- Portfolio Performance Evaluation Using Bloomberg -- Conclusion -- Web Site Information -- Selected References -- Bloomberg Exercises -- 8 Portfolio Selection-Markowitz Model -- Introduction -- Two-Security Portfolio Return-Risk Relation -- Markowitz Portfolio Selection -- Math Approach -- Quadratic Programming Approach.

Excel Solver Approach: Bloombergs Asset Allocation Optimizer Template -- Efficiency Frontier -- Best Efficient Portfolio -- Efficiency Frontiers for Stocks with Perfect Positive and Negative Correlations -- Single-Index Model -- Portfolio Return and Risk in Terms of the Single-Index Model -- Example -- Elton, Gruber, and Padberg -- Technique for Determining the Best Efficient Portfolio -- Bloomberg/Markowitz Excel Program -- Multi-Index Models -- Conclusion -- Notes -- Selected References -- Bloomberg Exercises -- 9 The Capital Asset Pricing Model -- Introduction -- Overview -- Derivation of the CAPM -- Summary -- Empirical Tests of the CAPM -- Application of CAPM: Wells Fargo Stock Selection Approach -- Conclusion -- Notes -- Selected References -- Bloomberg Exercises -- 10 The Arbitrage Pricing Theory -- Introduction -- Derivation of the Model -- λ Coefficient Values -- General APT Model -- Empirical Tests of the APT -- Unspecified Approach: Factor Analysis -- Specified Factor Approach -- Summary of Empirical Models -- Application of APT: Factor Models -- Conclusion -- Notes -- Selected References -- Bloomberg Exercises -- 11 The Financial Anatomy of a Company-Fundamental Analysis -- Introduction -- Stock Value -- Equity Valuation of a Firm -- Value of Assets -- Comparative Analysis -- Capital Structure -- Capital Structure, Risk, and Stock Price -- Capital Structure, EPS, and Stock Price -- Corporate Investments -- Case 1: Zuber Oil Company -- Inferences from the Case -- Gordon-Williams Model -- Case 2: Two-Dollar General Store -- Two-Stage and Three-Stage Growth Models -- Mergers and Acquisitions -- Merger Case -- Inference -- Conclusion -- Notes -- Selected References -- Bloomberg Exercises -- 12 Applied Fundamental Analysis -- Introduction -- Valuation Using the Multiplier Approach -- Estimating the P/e Multiplier -- Estimating the Multiplier.

Example: Macys Pe Ratio.