{"product_id":"fundamentals-of-financial-instruments-9781119816614","title":"Fundamentals of Financial Instruments","description":"\u003cb\u003eBook Synopsis\u003c\/b\u003e\u003cbr\u003e\u003cbr\u003e\u003cbr\u003e\u003cb\u003eTable of Contents\u003c\/b\u003e\u003cbr\u003e\u003cp\u003ePreface xxiii\u003c\/p\u003e \u003cp\u003ePreface to the First Edition xxiv\u003c\/p\u003e \u003cp\u003eAcknowledgments xxv\u003c\/p\u003e \u003cp\u003eAbout the Author xxvi\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 An Introduction to Financial Institutions, Instruments, and Markets 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Role of an Economic System 1\u003c\/p\u003e \u003cp\u003eA Command Economy 2\u003c\/p\u003e \u003cp\u003eAMarket Economy 2\u003c\/p\u003e \u003cp\u003eClassification of Economic Units 4\u003c\/p\u003e \u003cp\u003eAn Economy’s Relationship with the ExternalWorld 6\u003c\/p\u003e \u003cp\u003eThe Balance of Trade 8\u003c\/p\u003e \u003cp\u003eThe Current Account Balance 8\u003c\/p\u003e \u003cp\u003eFinancial Assets 9\u003c\/p\u003e \u003cp\u003eMoney 10\u003c\/p\u003e \u003cp\u003eMoney as a Unit of Account or a Standard of Value 10\u003c\/p\u003e \u003cp\u003eMoney as a Medium of Exchange 11\u003c\/p\u003e \u003cp\u003eMoney as a Store of Value 11\u003c\/p\u003e \u003cp\u003eMoney Is Perfectly Liquid 11\u003c\/p\u003e \u003cp\u003eEquity Shares 12\u003c\/p\u003e \u003cp\u003eDebt Securities 12\u003c\/p\u003e \u003cp\u003ePreferred Shares 14\u003c\/p\u003e \u003cp\u003eForeign Exchange 14\u003c\/p\u003e \u003cp\u003eDerivatives 14\u003c\/p\u003e \u003cp\u003eForward and Futures Contracts 15\u003c\/p\u003e \u003cp\u003eOptions Contracts 16\u003c\/p\u003e \u003cp\u003eSwaps 18\u003c\/p\u003e \u003cp\u003eMortgages and Mortgage-backed Securities 19\u003c\/p\u003e \u003cp\u003eHybrid Securities 19\u003c\/p\u003e \u003cp\u003ePrimary Markets and Secondary Markets 19\u003c\/p\u003e \u003cp\u003eExchanges and Over-the-Counter (OTC) Markets 21\u003c\/p\u003e \u003cp\u003eBrokers and Dealers 22\u003c\/p\u003e \u003cp\u003eThe Need for Brokers and Dealers 23\u003c\/p\u003e \u003cp\u003eTrading Positions 24\u003c\/p\u003e \u003cp\u003eThe Buy-side and the Sell-side 25\u003c\/p\u003e \u003cp\u003eInvestment Bankers 25\u003c\/p\u003e \u003cp\u003eDirect and Indirect Markets 26\u003c\/p\u003e \u003cp\u003eMutual Funds 27\u003c\/p\u003e \u003cp\u003eMoney and Capital Markets 30\u003c\/p\u003e \u003cp\u003eThe Eurocurrency Market 31\u003c\/p\u003e \u003cp\u003eThe International Bond Market 32\u003c\/p\u003e \u003cp\u003eGlobalization of Equity Markets 34\u003c\/p\u003e \u003cp\u003eDual Listing 35\u003c\/p\u003e \u003cp\u003eFungibility 37\u003c\/p\u003e \u003cp\u003eArbitrage 37\u003c\/p\u003e \u003cp\u003eArbitrage with ADRs 38\u003c\/p\u003e \u003cp\u003eGDRs 39\u003c\/p\u003e \u003cp\u003eRisk 39\u003c\/p\u003e \u003cp\u003eAfter the Trade – Clearing and Settlement 41\u003c\/p\u003e \u003cp\u003eDematerialization and the Role of a Depository 42\u003c\/p\u003e \u003cp\u003eCustodial Services 43\u003c\/p\u003e \u003cp\u003eGlobalization – The New Mantra 43\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Mathematics of Finance 46\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eInterest Rates 46\u003c\/p\u003e \u003cp\u003eThe Real Rate of Interest 46\u003c\/p\u003e \u003cp\u003eThe Fisher Equation 48\u003c\/p\u003e \u003cp\u003eSimple Interest \u0026amp; Compound Interest 49\u003c\/p\u003e \u003cp\u003e\u003ci\u003eVariables and Corresponding Symbols \u003c\/i\u003e50\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSimple Interest \u003c\/i\u003e50\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCompound Interest \u003c\/i\u003e51\u003c\/p\u003e \u003cp\u003eProperties 53\u003c\/p\u003e \u003cp\u003e\u003ci\u003eEffective Versus Nominal Rates of Interest \u003c\/i\u003e55\u003c\/p\u003e \u003cp\u003eA Symbolic Derivation 56\u003c\/p\u003e \u003cp\u003ePrinciple of Equivalency 56\u003c\/p\u003e \u003cp\u003eContinuous Compounding 57\u003c\/p\u003e \u003cp\u003eFuture Value 58\u003c\/p\u003e \u003cp\u003ePresent Value 59\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Mechanics of Present Value Calculation \u003c\/i\u003e59\u003c\/p\u003e \u003cp\u003eHandling a Series of Cash Flows 60\u003c\/p\u003e \u003cp\u003eThe Internal Rate of Return 61\u003c\/p\u003e \u003cp\u003eEvaluating an Investment 63\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Future Value Approach \u003c\/i\u003e63\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Present Value Approach \u003c\/i\u003e63\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Rate of Return Approach \u003c\/i\u003e63\u003c\/p\u003e \u003cp\u003eAnnuities: An Introduction 64\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePresent Value \u003c\/i\u003e64\u003c\/p\u003e \u003cp\u003e\u003ci\u003eFuture Value \u003c\/i\u003e65\u003c\/p\u003e \u003cp\u003eAnnuity Due 66\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePresent Value \u003c\/i\u003e66\u003c\/p\u003e \u003cp\u003e\u003ci\u003eFuture Value \u003c\/i\u003e67\u003c\/p\u003e \u003cp\u003ePerpetuities 67\u003c\/p\u003e \u003cp\u003eThe Amortization Method 68\u003c\/p\u003e \u003cp\u003eAmortization with a Balloon Payment 70\u003c\/p\u003e \u003cp\u003eThe Equal Principal Repayment Approach 71\u003c\/p\u003e \u003cp\u003eTypes of Interest Computation 71\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Simple Interest Approach \u003c\/i\u003e72\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Add-on Rate Approach \u003c\/i\u003e72\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Discount Technique \u003c\/i\u003e73\u003c\/p\u003e \u003cp\u003eLoans with a Compensating Balance 73\u003c\/p\u003e \u003cp\u003eTime Value of Money–related Functions in Excel 73\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Future Value (FV) Function in Excel \u003c\/i\u003e74\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Present Value Function in Excel \u003c\/i\u003e75\u003c\/p\u003e \u003cp\u003eComputing the Present and Future Values of Annuities and Annuities Due in Excel 75\u003c\/p\u003e \u003cp\u003eAmortization Schedules and Excel 76\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Equity Shares, Preferred Shares, and Stock Market Indices 78\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 78\u003c\/p\u003e \u003cp\u003ePar Value Versus Book Value 79\u003c\/p\u003e \u003cp\u003eAccounting for a Stock Issue 80\u003c\/p\u003e \u003cp\u003eVoting Rights 80\u003c\/p\u003e \u003cp\u003e\u003ci\u003eStatutory Versus Cumulative Voting \u003c\/i\u003e81\u003c\/p\u003e \u003cp\u003e\u003ci\u003eProxies \u003c\/i\u003e81\u003c\/p\u003e \u003cp\u003eDividends 82\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDividend Yield \u003c\/i\u003e83\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDividend Reinvestment Plans \u003c\/i\u003e84\u003c\/p\u003e \u003cp\u003e\u003ci\u003eStock Dividends \u003c\/i\u003e85\u003c\/p\u003e \u003cp\u003eTreasury Stock 86\u003c\/p\u003e \u003cp\u003eAccounting for Treasury Stock 86\u003c\/p\u003e \u003cp\u003eSplits and Reverse Splits 87\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCosts Associated with Splits and Stock Dividends \u003c\/i\u003e89\u003c\/p\u003e \u003cp\u003ePreemptive Rights 89\u003c\/p\u003e \u003cp\u003eInterpreting Stated Ratios 91\u003c\/p\u003e \u003cp\u003eHandling Fractions 91\u003c\/p\u003e \u003cp\u003ePhysical Certificates Versus Book Entry 92\u003c\/p\u003e \u003cp\u003eTracking Stock 92\u003c\/p\u003e \u003cp\u003eReport Cards 93\u003c\/p\u003e \u003cp\u003eTypes of Stocks 93\u003c\/p\u003e \u003cp\u003e\u003ci\u003eInterest-sensitive Stocks \u003c\/i\u003e93\u003c\/p\u003e \u003cp\u003eRisk and Return and the Concept of Diversification 94\u003c\/p\u003e \u003cp\u003ePreferred Shares 96\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCallable Preferred Stock \u003c\/i\u003e97\u003c\/p\u003e \u003cp\u003e\u003ci\u003eConvertible Preferred Shares \u003c\/i\u003e97\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCumulative Preferred Shares \u003c\/i\u003e98\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAdjustable-Rate Preferred Shares \u003c\/i\u003e100\u003c\/p\u003e \u003cp\u003e\u003ci\u003eParticipating Preferred Shares \u003c\/i\u003e100\u003c\/p\u003e \u003cp\u003eDividend Discount Models 100\u003c\/p\u003e \u003cp\u003eA General Valuation Model 101\u003c\/p\u003e \u003cp\u003eThe Constant Growth Model 102\u003c\/p\u003e \u003cp\u003eThe Two-Stage Model 102\u003c\/p\u003e \u003cp\u003eThe Three-Stage Model 103\u003c\/p\u003e \u003cp\u003eThe H Model 105\u003c\/p\u003e \u003cp\u003eStock Market Indices 105\u003c\/p\u003e \u003cp\u003ePrice-weighted Indices 105\u003c\/p\u003e \u003cp\u003e\u003ci\u003eChanging the Divisor \u003c\/i\u003e107\u003c\/p\u003e \u003cp\u003eThe Importance of Price 109\u003c\/p\u003e \u003cp\u003eValue-weighted Indices 110\u003c\/p\u003e \u003cp\u003e\u003ci\u003eChanging the Divisor \u003c\/i\u003e111\u003c\/p\u003e \u003cp\u003eChanging the Base Period Capitalization 113\u003c\/p\u003e \u003cp\u003eEquallyWeighted Indices 113\u003c\/p\u003e \u003cp\u003eTracking Portfolios 114\u003c\/p\u003e \u003cp\u003e\u003ci\u003eRebalancing a Tracking Portfolio \u003c\/i\u003e114\u003c\/p\u003e \u003cp\u003eEquallyWeighted Portfolios 114\u003c\/p\u003e \u003cp\u003ePrice-weighted Portfolios 116\u003c\/p\u003e \u003cp\u003eRights Issues 117\u003c\/p\u003e \u003cp\u003eValue-weighted Portfolios 117\u003c\/p\u003e \u003cp\u003eHandling a Rights Issue 119\u003c\/p\u003e \u003cp\u003eThe Free-floating Methodology 120\u003c\/p\u003e \u003cp\u003eWell-known Global Indices 121\u003c\/p\u003e \u003cp\u003eMargin Trading and Short-selling 121\u003c\/p\u003e \u003cp\u003eTerminology 121\u003c\/p\u003e \u003cp\u003eCase A: The Market Rises 124\u003c\/p\u003e \u003cp\u003eCase B: The Market Declines 124\u003c\/p\u003e \u003cp\u003eCase A: The Market Rises 125\u003c\/p\u003e \u003cp\u003eCase B: The Market Declines 125\u003c\/p\u003e \u003cp\u003eInterest and Commissions 125\u003c\/p\u003e \u003cp\u003eCase A: The Market Rises 126\u003c\/p\u003e \u003cp\u003eCase B: The Market Declines 126\u003c\/p\u003e \u003cp\u003eMaintenance Margin 126\u003c\/p\u003e \u003cp\u003eShort-selling 127\u003c\/p\u003e \u003cp\u003eMaintenance of a Short Position 130\u003c\/p\u003e \u003cp\u003eShorting Against the Box 131\u003c\/p\u003e \u003cp\u003eThe Risk Factor 131\u003c\/p\u003e \u003cp\u003eThe Economic Role of Short Sales 132\u003c\/p\u003e \u003cp\u003eThe Uptick Rule 132\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Bonds 134\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 134\u003c\/p\u003e \u003cp\u003eTerms Used in the Bond Market 136\u003c\/p\u003e \u003cp\u003e\u003ci\u003eFace Value \u003c\/i\u003e136\u003c\/p\u003e \u003cp\u003e\u003ci\u003eTerm to Maturity \u003c\/i\u003e136\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCoupon \u003c\/i\u003e136\u003c\/p\u003e \u003cp\u003e\u003ci\u003eYield to Maturity \u003c\/i\u003e137\u003c\/p\u003e \u003cp\u003eValuation of a Bond 137\u003c\/p\u003e \u003cp\u003ePar, Premium, and Discount Bonds 138\u003c\/p\u003e \u003cp\u003eEvolution of the Price 139\u003c\/p\u003e \u003cp\u003eZero-coupon Bonds 140\u003c\/p\u003e \u003cp\u003eValuing a Bond in Between Coupon Dates 141\u003c\/p\u003e \u003cp\u003eDay-Count Conventions 142\u003c\/p\u003e \u003cp\u003eActual-Actual 142\u003c\/p\u003e \u003cp\u003eThe Treasury’s Approach 143\u003c\/p\u003e \u003cp\u003eCorporate Bonds 144\u003c\/p\u003e \u003cp\u003eAccrued Interest 144\u003c\/p\u003e \u003cp\u003eNegative Accrued Interest 145\u003c\/p\u003e \u003cp\u003eYields 146\u003c\/p\u003e \u003cp\u003eThe Current Yield 147\u003c\/p\u003e \u003cp\u003eSimple Yield to Maturity 148\u003c\/p\u003e \u003cp\u003eYield to Maturity 148\u003c\/p\u003e \u003cp\u003eApproximate Yield to Maturity 149\u003c\/p\u003e \u003cp\u003eZero-coupon Bonds and the YTM 150\u003c\/p\u003e \u003cp\u003eAnalyzing the YTM 150\u003c\/p\u003e \u003cp\u003eThe Realized Compound Yield 152\u003c\/p\u003e \u003cp\u003eReinvestment and Zero-Coupon Bonds 152\u003c\/p\u003e \u003cp\u003eThe Holding Period Yield 153\u003c\/p\u003e \u003cp\u003eTaxable Equivalent Yield 153\u003c\/p\u003e \u003cp\u003eCredit Risk 154\u003c\/p\u003e \u003cp\u003eBond Insurance 156\u003c\/p\u003e \u003cp\u003eEquivalence with Zero-coupon Bonds 156\u003c\/p\u003e \u003cp\u003eSpot Rates 156\u003c\/p\u003e \u003cp\u003eThe Coupon Effect 157\u003c\/p\u003e \u003cp\u003eBootstrapping 158\u003c\/p\u003e \u003cp\u003eForward Rates 158\u003c\/p\u003e \u003cp\u003eThe Yield Curve and The Term Structure 159\u003c\/p\u003e \u003cp\u003eShapes of the Term Structure 159\u003c\/p\u003e \u003cp\u003eTheories of the Term Structure 160\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Pure or Unbiased Expectations Hypothesis \u003c\/i\u003e160\u003c\/p\u003e \u003cp\u003eThe Liquidity Premium Hypothesis 160\u003c\/p\u003e \u003cp\u003eThe Money Substitute Hypothesis 161\u003c\/p\u003e \u003cp\u003eThe Market Segmentation Hypothesis 161\u003c\/p\u003e \u003cp\u003eThe Preferred Habitat Theory 161\u003c\/p\u003e \u003cp\u003eThe Short Rate 162\u003c\/p\u003e \u003cp\u003eFloating Rate Bonds 163\u003c\/p\u003e \u003cp\u003eSimple Margin 165\u003c\/p\u003e \u003cp\u003eBonds with Embedded Options 165\u003c\/p\u003e \u003cp\u003eCallable Bonds 165\u003c\/p\u003e \u003cp\u003eYield to Call 166\u003c\/p\u003e \u003cp\u003ePutable Bonds 167\u003c\/p\u003e \u003cp\u003eConvertible Bonds 168\u003c\/p\u003e \u003cp\u003eUsing Short Rates to Value Bonds 168\u003c\/p\u003e \u003cp\u003ePrice Volatility 170\u003c\/p\u003e \u003cp\u003eA Concise Formula 171\u003c\/p\u003e \u003cp\u003eDuration and Price Volatility 171\u003c\/p\u003e \u003cp\u003eProperties of Duration 172\u003c\/p\u003e \u003cp\u003eDollar Duration 172\u003c\/p\u003e \u003cp\u003eConvexity 172\u003c\/p\u003e \u003cp\u003eA Concise Formula 174\u003c\/p\u003e \u003cp\u003eDollar Convexity 175\u003c\/p\u003e \u003cp\u003eProperties of Convexity 175\u003c\/p\u003e \u003cp\u003eImmunization 175\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAnalysis \u003c\/i\u003e176\u003c\/p\u003e \u003cp\u003eTreasury Auctions 177\u003c\/p\u003e \u003cp\u003eWhen Issued Trading 179\u003c\/p\u003e \u003cp\u003ePrice Quotes 179\u003c\/p\u003e \u003cp\u003eSTRIPS 179\u003c\/p\u003e \u003cp\u003eInflation Indexed Bonds 180\u003c\/p\u003e \u003cp\u003eComputing Price Given Yield and Vice Versa in Excel 182\u003c\/p\u003e \u003cp\u003eComputing Duration in Excel 185\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Money Markets 187\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 187\u003c\/p\u003e \u003cp\u003eMarket Supervision 190\u003c\/p\u003e \u003cp\u003eThe Federal Reserve System 190\u003c\/p\u003e \u003cp\u003eKey Dates in the Case of Cash Market Instruments 191\u003c\/p\u003e \u003cp\u003eThe Modified Following Business Day Convention 192\u003c\/p\u003e \u003cp\u003eThe End\/End Rule 192\u003c\/p\u003e \u003cp\u003eThe Interbank Market 193\u003c\/p\u003e \u003cp\u003eTypes of Loans 193\u003c\/p\u003e \u003cp\u003eLIBOR 194\u003c\/p\u003e \u003cp\u003eLIBID 194\u003c\/p\u003e \u003cp\u003eSONIA 194\u003c\/p\u003e \u003cp\u003eTransitioning from LIBOR 195\u003c\/p\u003e \u003cp\u003eInterest Computation Methods 195\u003c\/p\u003e \u003cp\u003eTerm Money Market Deposits 197\u003c\/p\u003e \u003cp\u003eMoney Market Forward Rates 197\u003c\/p\u003e \u003cp\u003eFederal Funds 198\u003c\/p\u003e \u003cp\u003eFederal Funds Versus Clearinghouse Funds 199\u003c\/p\u003e \u003cp\u003eCorrespondent Banks: Nostro and Vostro Accounts 200\u003c\/p\u003e \u003cp\u003eTreasury Bills 200\u003c\/p\u003e \u003cp\u003eReopenings 201\u003c\/p\u003e \u003cp\u003eYields on Discount Securities 202\u003c\/p\u003e \u003cp\u003eNotation 202\u003c\/p\u003e \u003cp\u003eDiscount Rates and T-bill Prices 202\u003c\/p\u003e \u003cp\u003eThe Bond Equivalent Yield (BEY) 203\u003c\/p\u003e \u003cp\u003eCase A: \u003ci\u003eTm \u003c\/i\u003e\u0026lt; 182 days 203\u003c\/p\u003e \u003cp\u003eThe Money Market Yield 205\u003c\/p\u003e \u003cp\u003eCase B: \u003ci\u003eTm \u003c\/i\u003e\u0026gt; 182 days 205\u003c\/p\u003e \u003cp\u003eHolding Period Return 207\u003c\/p\u003e \u003cp\u003eValue of an 01 208\u003c\/p\u003e \u003cp\u003eConcept of Carry 208\u003c\/p\u003e \u003cp\u003eConcept of a Tail 208\u003c\/p\u003e \u003cp\u003eT-Bill Related Functions in Excel 209\u003c\/p\u003e \u003cp\u003eTBILLPRICE 209\u003c\/p\u003e \u003cp\u003eTBILLYIELD 210\u003c\/p\u003e \u003cp\u003eTBILLEQ 210\u003c\/p\u003e \u003cp\u003eDISC 210\u003c\/p\u003e \u003cp\u003eTreasury Auctions 211\u003c\/p\u003e \u003cp\u003eTypes of Auctions 211\u003c\/p\u003e \u003cp\u003eResults of an Auction 212\u003c\/p\u003e \u003cp\u003ePrimary Dealers and Open Market Operations 213\u003c\/p\u003e \u003cp\u003eRepurchase Agreements 213\u003c\/p\u003e \u003cp\u003eReverse Repos 214\u003c\/p\u003e \u003cp\u003eGeneral Collateral Versus Special Repos 215\u003c\/p\u003e \u003cp\u003eMargins 215\u003c\/p\u003e \u003cp\u003eSale and Buyback 217\u003c\/p\u003e \u003cp\u003eCollateral 217\u003c\/p\u003e \u003cp\u003eRepos and Open Market Operations 217\u003c\/p\u003e \u003cp\u003eNegotiable CDs 218\u003c\/p\u003e \u003cp\u003eNotation 218\u003c\/p\u003e \u003cp\u003eCost of a CD for the Issuing Bank 221\u003c\/p\u003e \u003cp\u003eTerm CDs 221\u003c\/p\u003e \u003cp\u003eCDs Versus Money Market Time Deposits 224\u003c\/p\u003e \u003cp\u003eCommercial Paper 224\u003c\/p\u003e \u003cp\u003eLetters of Credit and Bank Guarantees 225\u003c\/p\u003e \u003cp\u003eYankee Paper 226\u003c\/p\u003e \u003cp\u003eCredit Rating 227\u003c\/p\u003e \u003cp\u003eMoody’s Rating Scale 227\u003c\/p\u003e \u003cp\u003eS\u0026amp;P’s Rating Scale 227\u003c\/p\u003e \u003cp\u003eFitch’s Rating Scale 228\u003c\/p\u003e \u003cp\u003eBills of Exchange 228\u003c\/p\u003e \u003cp\u003eDocuments Against Payment (DAP) Versus Documents Against Acceptance (DAA) Transactions 230\u003c\/p\u003e \u003cp\u003eEligible and Noneligible Bank Bills 230\u003c\/p\u003e \u003cp\u003eBuying and Selling Bills 230\u003c\/p\u003e \u003cp\u003eBankers’ Acceptance 231\u003c\/p\u003e \u003cp\u003eAcceptance Credits 232\u003c\/p\u003e \u003cp\u003eEurocurrency Deposits 232\u003c\/p\u003e \u003cp\u003eAppendix 234\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Forward and Futures Contracts 235\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 235\u003c\/p\u003e \u003cp\u003eMarking to Market for a Trader in Practice 242\u003c\/p\u003e \u003cp\u003eDelivery Options 242\u003c\/p\u003e \u003cp\u003eProfit Diagrams 242\u003c\/p\u003e \u003cp\u003eValue at Risk 244\u003c\/p\u003e \u003cp\u003eThe Expected Shortfall 245\u003c\/p\u003e \u003cp\u003eSpot-Futures Equivalence 246\u003c\/p\u003e \u003cp\u003eProducts and Exchanges 247\u003c\/p\u003e \u003cp\u003eCash-and-carry Arbitrage 247\u003c\/p\u003e \u003cp\u003eReverse Cash-and-carry Arbitrage 247\u003c\/p\u003e \u003cp\u003eRepo and Reverse Repo Rates 248\u003c\/p\u003e \u003cp\u003eSynthetic Securities 248\u003c\/p\u003e \u003cp\u003eValuation 248\u003c\/p\u003e \u003cp\u003eThe Case of Assets Making Payouts 249\u003c\/p\u003e \u003cp\u003ePhysical Assets 250\u003c\/p\u003e \u003cp\u003eNet Carry 252\u003c\/p\u003e \u003cp\u003eBackwardation and Contango 252\u003c\/p\u003e \u003cp\u003eThe Case of Multiple Deliverable Grades 253\u003c\/p\u003e \u003cp\u003eRisk Arbitrage 255\u003c\/p\u003e \u003cp\u003eThe Case of Multiplicative Adjustment 255\u003c\/p\u003e \u003cp\u003eThe Case of Additive Adjustment 256\u003c\/p\u003e \u003cp\u003eTrading Volume and Open Interest 259\u003c\/p\u003e \u003cp\u003eDelivery 261\u003c\/p\u003e \u003cp\u003eCash Settlement 262\u003c\/p\u003e \u003cp\u003eHedging and Speculation 262\u003c\/p\u003e \u003cp\u003eRolling a Hedge 264\u003c\/p\u003e \u003cp\u003eTailing a Hedge 264\u003c\/p\u003e \u003cp\u003eThe Minimum Variance Hedge Ratio 265\u003c\/p\u003e \u003cp\u003eEstimation of the Hedge Ratio and the Hedging Effectiveness 266\u003c\/p\u003e \u003cp\u003eCross-hedging 266\u003c\/p\u003e \u003cp\u003eSpeculation 266\u003c\/p\u003e \u003cp\u003eLeverage 268\u003c\/p\u003e \u003cp\u003eContract Value 269\u003c\/p\u003e \u003cp\u003eForward Versus Futures Prices 270\u003c\/p\u003e \u003cp\u003eHedging the Rate of Return on a Stock Portfolio 271\u003c\/p\u003e \u003cp\u003eChanging the Beta 272\u003c\/p\u003e \u003cp\u003eProgram Trading 273\u003c\/p\u003e \u003cp\u003eStock Picking 275\u003c\/p\u003e \u003cp\u003ePortfolio Insurance 277\u003c\/p\u003e \u003cp\u003eImportance of Futures 279\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Options Contracts 280\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 280\u003c\/p\u003e \u003cp\u003eNotation 282\u003c\/p\u003e \u003cp\u003eExercising Options 282\u003c\/p\u003e \u003cp\u003eMoneyness 285\u003c\/p\u003e \u003cp\u003eExchange-Traded Options 286\u003c\/p\u003e \u003cp\u003eOption Class and Option Series 287\u003c\/p\u003e \u003cp\u003eFLEX Options 287\u003c\/p\u003e \u003cp\u003eContract Assignment 288\u003c\/p\u003e \u003cp\u003eAdjusting for Corporate Actions 288\u003c\/p\u003e \u003cp\u003eNonnegative Option Premia 289\u003c\/p\u003e \u003cp\u003eIntrinsic Value and Time Value 289\u003c\/p\u003e \u003cp\u003eTime Value of American Options 290\u003c\/p\u003e \u003cp\u003eTime Value at Expiration 291\u003c\/p\u003e \u003cp\u003ePut-Call Parity 291\u003c\/p\u003e \u003cp\u003eImplications for the Time Value 294\u003c\/p\u003e \u003cp\u003ePut-Call Parity with Dividends 295\u003c\/p\u003e \u003cp\u003eImplications for the Time Value 296\u003c\/p\u003e \u003cp\u003eA Very Important Property for American Calls 297\u003c\/p\u003e \u003cp\u003eEarly Exercise of Options: An Analysis 298\u003c\/p\u003e \u003cp\u003eProfit Profiles 299\u003c\/p\u003e \u003cp\u003eSpeculation with Options 301\u003c\/p\u003e \u003cp\u003eHedging with Options 303\u003c\/p\u003e \u003cp\u003e\u003ci\u003eUsing Call Options to Protect a Short Position \u003c\/i\u003e303\u003c\/p\u003e \u003cp\u003e\u003ci\u003eUsing Put Options to Protect a Long Spot Position \u003c\/i\u003e304\u003c\/p\u003e \u003cp\u003eValuation 305\u003c\/p\u003e \u003cp\u003eThe Binomial Option Pricing Model 307\u003c\/p\u003e \u003cp\u003eThe Two-period Model 309\u003c\/p\u003e \u003cp\u003eValuation of European Put Options 310\u003c\/p\u003e \u003cp\u003eValuing American Options 311\u003c\/p\u003e \u003cp\u003eImplementing the Binomial Model in Practice 312\u003c\/p\u003e \u003cp\u003eThe Black-Scholes Model 313\u003c\/p\u003e \u003cp\u003ePut-Call Parity 314\u003c\/p\u003e \u003cp\u003eInterpretation of the Black-Scholes Formula 314\u003c\/p\u003e \u003cp\u003eThe Greeks 315\u003c\/p\u003e \u003cp\u003eOption Strategies 316\u003c\/p\u003e \u003cp\u003e\u003ci\u003eBull Spreads \u003c\/i\u003e316\u003c\/p\u003e \u003cp\u003e\u003ci\u003eBear Spreads \u003c\/i\u003e318\u003c\/p\u003e \u003cp\u003e\u003ci\u003eButterfly Spread \u003c\/i\u003e320\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Convexity Property \u003c\/i\u003e321\u003c\/p\u003e \u003cp\u003e\u003ci\u003eA Straddle \u003c\/i\u003e323\u003c\/p\u003e \u003cp\u003e\u003ci\u003eA Strangle \u003c\/i\u003e324\u003c\/p\u003e \u003cp\u003eFutures Options 326\u003c\/p\u003e \u003cp\u003ePut-Call Parity 327\u003c\/p\u003e \u003cp\u003eThe Black Model 327\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Foreign Exchange 329\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 329\u003c\/p\u003e \u003cp\u003eCurrency Codes 330\u003c\/p\u003e \u003cp\u003eBase and Variable Currencies 330\u003c\/p\u003e \u003cp\u003eDirect and Indirect Quotes 331\u003c\/p\u003e \u003cp\u003eEuropean Terms and American Terms 331\u003c\/p\u003e \u003cp\u003eBid and Ask Quotes 331\u003c\/p\u003e \u003cp\u003eAppreciating and Depreciating Currencies 332\u003c\/p\u003e \u003cp\u003eConverting Direct Quotes to Indirect Quotes 333\u003c\/p\u003e \u003cp\u003ePoints 333\u003c\/p\u003e \u003cp\u003eRates of Return 334\u003c\/p\u003e \u003cp\u003eThe Impact of Spreads on Returns 335\u003c\/p\u003e \u003cp\u003eArbitrage in Spot Markets 336\u003c\/p\u003e \u003cp\u003eOne-Point Arbitrage 336\u003c\/p\u003e \u003cp\u003eTwo-Point Arbitrage 336\u003c\/p\u003e \u003cp\u003eTriangular Arbitrage 337\u003c\/p\u003e \u003cp\u003eCross Rates 338\u003c\/p\u003e \u003cp\u003eMarket Rates and Exchange Margins 339\u003c\/p\u003e \u003cp\u003eValue Dates 340\u003c\/p\u003e \u003cp\u003eThe Forward Market 340\u003c\/p\u003e \u003cp\u003eOutright Forward Rates 341\u003c\/p\u003e \u003cp\u003eSwap Points 341\u003c\/p\u003e \u003cp\u003eBroken-Dated Contracts 343\u003c\/p\u003e \u003cp\u003eCovered Interest Arbitrage 344\u003c\/p\u003e \u003cp\u003eA Perfect Market 345\u003c\/p\u003e \u003cp\u003eForeign Exchange Swaps 346\u003c\/p\u003e \u003cp\u003eThe Cost 347\u003c\/p\u003e \u003cp\u003eThe Motive 348\u003c\/p\u003e \u003cp\u003eInterpretation of the Swap Points 349\u003c\/p\u003e \u003cp\u003eA Clarification 350\u003c\/p\u003e \u003cp\u003eShort-Date Contracts 350\u003c\/p\u003e \u003cp\u003eOption Forwards 353\u003c\/p\u003e \u003cp\u003eNondeliverable Forwards 356\u003c\/p\u003e \u003cp\u003eRange Forwards 357\u003c\/p\u003e \u003cp\u003eFutures Markets 357\u003c\/p\u003e \u003cp\u003eHedging Using Currency Futures 357\u003c\/p\u003e \u003cp\u003eA Selling Hedge 357\u003c\/p\u003e \u003cp\u003eA Buying Hedge 358\u003c\/p\u003e \u003cp\u003eExchange-Traded Foreign Currency Options 359\u003c\/p\u003e \u003cp\u003eSpeculating with FOREX Options 359\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Garman-Kohlhagen Model \u003c\/i\u003e360\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePut-Call Parity \u003c\/i\u003e361\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Binomial Model \u003c\/i\u003e361\u003c\/p\u003e \u003cp\u003eExchange Rates and Competitiveness 363\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Mortgages and Mortgage-backed Securities 364\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 364\u003c\/p\u003e \u003cp\u003eMarket Participants 364\u003c\/p\u003e \u003cp\u003eMortgage Origination 364\u003c\/p\u003e \u003cp\u003e\u003ci\u003eIncome for the Originator \u003c\/i\u003e365\u003c\/p\u003e \u003cp\u003e\u003ci\u003eMortgage Servicing \u003c\/i\u003e365\u003c\/p\u003e \u003cp\u003e\u003ci\u003eEscrow Accounts \u003c\/i\u003e365\u003c\/p\u003e \u003cp\u003e\u003ci\u003eIncome for the Servicer \u003c\/i\u003e365\u003c\/p\u003e \u003cp\u003e\u003ci\u003eMortgage Insurance \u003c\/i\u003e366\u003c\/p\u003e \u003cp\u003e\u003ci\u003eGovernment Insurance and PMI \u003c\/i\u003e366\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSecondary Sales \u003c\/i\u003e366\u003c\/p\u003e \u003cp\u003eRisks in Mortgage Lending 367\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDefault Risk \u003c\/i\u003e367\u003c\/p\u003e \u003cp\u003e\u003ci\u003eLiquidity Risk \u003c\/i\u003e367\u003c\/p\u003e \u003cp\u003e\u003ci\u003eInterest Rate Risk \u003c\/i\u003e367\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePrepayment Risk \u003c\/i\u003e368\u003c\/p\u003e \u003cp\u003eOther Mortgage Structures 369\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAdjustable-Rate Mortgage (ARM) \u003c\/i\u003e369\u003c\/p\u003e \u003cp\u003eOption to Change the Maturity 371\u003c\/p\u003e \u003cp\u003eRate Caps 371\u003c\/p\u003e \u003cp\u003eCarryovers 372\u003c\/p\u003e \u003cp\u003ePayment Caps 372\u003c\/p\u003e \u003cp\u003eNegative Amortization 374\u003c\/p\u003e \u003cp\u003e\u003ci\u003eGraduated Payment Mortgage \u003c\/i\u003e376\u003c\/p\u003e \u003cp\u003e\u003ci\u003eGrowing Equity Mortgages (GEM) \u003c\/i\u003e378\u003c\/p\u003e \u003cp\u003e\u003ci\u003eWAC and WAM \u003c\/i\u003e379\u003c\/p\u003e \u003cp\u003eCalculation ofWAC andWAM 379\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePass-Through Securities \u003c\/i\u003e379\u003c\/p\u003e \u003cp\u003eCash Flows for a Pass-Through 381\u003c\/p\u003e \u003cp\u003ePrepayment Conventions 381\u003c\/p\u003e \u003cp\u003eSingle Month Mortality Rate 382\u003c\/p\u003e \u003cp\u003eAverage Life 388\u003c\/p\u003e \u003cp\u003eCash Flow Yield 389\u003c\/p\u003e \u003cp\u003eANote 390\u003c\/p\u003e \u003cp\u003eConditional Prepayment Rate 390\u003c\/p\u003e \u003cp\u003ePSA Prepayment Benchmark 391\u003c\/p\u003e \u003cp\u003e\u003ci\u003eIllustration of 100 PSA \u003c\/i\u003e392\u003c\/p\u003e \u003cp\u003eAnalysis 393\u003c\/p\u003e \u003cp\u003e\u003ci\u003eIllustration of 200 PSA \u003c\/i\u003e393\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCollateralized Mortgage Obligations \u003c\/i\u003e394\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSequential Pay CMO \u003c\/i\u003e394\u003c\/p\u003e \u003cp\u003eAnalysis – Tranche A 395\u003c\/p\u003e \u003cp\u003eAnalysis – Tranche B 398\u003c\/p\u003e \u003cp\u003eAnalysis – Tranche C 398\u003c\/p\u003e \u003cp\u003eAnalysis – Tranche D 398\u003c\/p\u003e \u003cp\u003eExtension Risk and Contraction Risk 399\u003c\/p\u003e \u003cp\u003eAccrual Bonds 399\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAnalysis \u003c\/i\u003e399\u003c\/p\u003e \u003cp\u003eFloating Rate Tranches 403\u003c\/p\u003e \u003cp\u003eNotional Interest-only Tranche 404\u003c\/p\u003e \u003cp\u003eInterest-only and Principal-only Strips 405\u003c\/p\u003e \u003cp\u003ePAC Bonds 405\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Swaps 411\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 411\u003c\/p\u003e \u003cp\u003eMarket Terminology 415\u003c\/p\u003e \u003cp\u003eKey Dates 415\u003c\/p\u003e \u003cp\u003eInherent Risk 416\u003c\/p\u003e \u003cp\u003eThe Swap Rate 416\u003c\/p\u003e \u003cp\u003eIllustrative Swap Rates 417\u003c\/p\u003e \u003cp\u003eDetermining the Swap Rate 417\u003c\/p\u003e \u003cp\u003eThe Market Method 419\u003c\/p\u003e \u003cp\u003eValuation of a Swap During Its Life 419\u003c\/p\u003e \u003cp\u003eTerminating a Swap 420\u003c\/p\u003e \u003cp\u003eThe Role of Banks in the Swap Market 421\u003c\/p\u003e \u003cp\u003eMotivation for the Swap 421\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSpeculation \u003c\/i\u003e421\u003c\/p\u003e \u003cp\u003e\u003ci\u003eHedging \u003c\/i\u003e422\u003c\/p\u003e \u003cp\u003eComparative Advantage and Credit Arbitrage 422\u003c\/p\u003e \u003cp\u003eSwap Quotations 423\u003c\/p\u003e \u003cp\u003eMatched Payments 424\u003c\/p\u003e \u003cp\u003eAmortizing Swaps 425\u003c\/p\u003e \u003cp\u003eExtendable and Cancelable Swaps 425\u003c\/p\u003e \u003cp\u003eSwaptions 425\u003c\/p\u003e \u003cp\u003eCurrency Swaps 426\u003c\/p\u003e \u003cp\u003eCross-Currency Swaps 427\u003c\/p\u003e \u003cp\u003eValuation 427\u003c\/p\u003e \u003cp\u003eCurrency Risks 429\u003c\/p\u003e \u003cp\u003eHedging with Currency Swaps 429\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Mutual Funds, ETFs, and Pension Funds 430\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 430\u003c\/p\u003e \u003cp\u003ePros and Cons of Investing in a Fund 430\u003c\/p\u003e \u003cp\u003eShares and Units 431\u003c\/p\u003e \u003cp\u003eOpen-end Versus Closed-end Funds 432\u003c\/p\u003e \u003cp\u003ePremium\/Discount of a Closed-End Fund 433\u003c\/p\u003e \u003cp\u003eUnit Trusts 433\u003c\/p\u003e \u003cp\u003eCalculating the NAV 433\u003c\/p\u003e \u003cp\u003eCosts 436\u003c\/p\u003e \u003cp\u003eSales Charges 436\u003c\/p\u003e \u003cp\u003ePrice Quotes 440\u003c\/p\u003e \u003cp\u003eAnnual Operating Expenses 440\u003c\/p\u003e \u003cp\u003eSwitching Fees 441\u003c\/p\u003e \u003cp\u003eDividend Options 441\u003c\/p\u003e \u003cp\u003eTypes of Mutual Funds 443\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCategorization by Nature of Investments \u003c\/i\u003e444\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCategorization by Investment Objectives \u003c\/i\u003e444\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCategorization by Risk Profile \u003c\/i\u003e444\u003c\/p\u003e \u003cp\u003eMoney Market Funds 444\u003c\/p\u003e \u003cp\u003eGilt Funds 445\u003c\/p\u003e \u003cp\u003eDebt Funds 445\u003c\/p\u003e \u003cp\u003eDiversified Debt Funds 445\u003c\/p\u003e \u003cp\u003eFocused Debt Funds 445\u003c\/p\u003e \u003cp\u003eHigh Yield Debt Funds 446\u003c\/p\u003e \u003cp\u003eDebt Funds and Bond Duration 446\u003c\/p\u003e \u003cp\u003eEquity Funds 446\u003c\/p\u003e \u003cp\u003eAggressive Growth Funds 446\u003c\/p\u003e \u003cp\u003eGrowth Funds 447\u003c\/p\u003e \u003cp\u003eSpecialty Funds 447\u003c\/p\u003e \u003cp\u003eSector Funds 447\u003c\/p\u003e \u003cp\u003eOffshore Funds 447\u003c\/p\u003e \u003cp\u003eSmall Cap Equity Funds 447\u003c\/p\u003e \u003cp\u003eOption Income Funds 448\u003c\/p\u003e \u003cp\u003eFund of Funds 448\u003c\/p\u003e \u003cp\u003eEquity Index Funds 448\u003c\/p\u003e \u003cp\u003eValue Funds 448\u003c\/p\u003e \u003cp\u003eEquity Income Funds 448\u003c\/p\u003e \u003cp\u003eBalanced Funds 449\u003c\/p\u003e \u003cp\u003eAsset-Allocation Funds 449\u003c\/p\u003e \u003cp\u003eCommodity Funds 449\u003c\/p\u003e \u003cp\u003eReal Estate Funds 449\u003c\/p\u003e \u003cp\u003eTax-exempt Funds 449\u003c\/p\u003e \u003cp\u003eRisk Categories 450\u003c\/p\u003e \u003cp\u003e\u003ci\u003eLow Level Risk Funds \u003c\/i\u003e450\u003c\/p\u003e \u003cp\u003e\u003ci\u003eModerate Level Risks \u003c\/i\u003e450\u003c\/p\u003e \u003cp\u003e\u003ci\u003eHigh Level Risks \u003c\/i\u003e450\u003c\/p\u003e \u003cp\u003eThe Prospectus 450\u003c\/p\u003e \u003cp\u003eStructure of a Mutual Fund 450\u003c\/p\u003e \u003cp\u003eServices 451\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAutomatic Reinvestment Plan \u003c\/i\u003e451\u003c\/p\u003e \u003cp\u003e\u003ci\u003eContractual Accumulation Plan \u003c\/i\u003e451\u003c\/p\u003e \u003cp\u003e\u003ci\u003eVoluntary Accumulation Plan \u003c\/i\u003e451\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCheckWriting \u003c\/i\u003e452\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSwitching Within a Family of Funds \u003c\/i\u003e452\u003c\/p\u003e \u003cp\u003e\u003ci\u003eVoluntaryWithdrawal Plans \u003c\/i\u003e452\u003c\/p\u003e \u003cp\u003eInvestment Techniques 452\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDollar-cost Averaging \u003c\/i\u003e452\u003c\/p\u003e \u003cp\u003e\u003ci\u003eValue Averaging \u003c\/i\u003e453\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Combined Method \u003c\/i\u003e454\u003c\/p\u003e \u003cp\u003eThe Total Return 455\u003c\/p\u003e \u003cp\u003eComputation of Returns 456\u003c\/p\u003e \u003cp\u003e\u003ci\u003eAnalysis \u003c\/i\u003e457\u003c\/p\u003e \u003cp\u003eTaxation Issues 458\u003c\/p\u003e \u003cp\u003eAlternatives to Mutual Funds 459\u003c\/p\u003e \u003cp\u003e\u003ci\u003eExchange-Traded Funds (ETFs) \u003c\/i\u003e460\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePotential Asset Classes \u003c\/i\u003e461\u003c\/p\u003e \u003cp\u003e\u003ci\u003eSegregated (Separately Managed) Accounts \u003c\/i\u003e461\u003c\/p\u003e \u003cp\u003e\u003ci\u003ePension Plans \u003c\/i\u003e462\u003c\/p\u003e \u003cp\u003eTypes of Plans 462\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDefined Benefit Plans \u003c\/i\u003e462\u003c\/p\u003e \u003cp\u003e\u003ci\u003eDefined Contribution Plans \u003c\/i\u003e463\u003c\/p\u003e \u003cp\u003eIRAs 464\u003c\/p\u003e \u003cp\u003eCash Balance Plans 464\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Orders and Exchanges 465\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eImportant Acronyms 467\u003c\/p\u003e \u003cp\u003eMarket Orders and Limit Orders 467\u003c\/p\u003e \u003cp\u003eThe Limit Price 468\u003c\/p\u003e \u003cp\u003eThe Limit Order Books 468\u003c\/p\u003e \u003cp\u003eIllustration of a Limit Order Book 468\u003c\/p\u003e \u003cp\u003eLimit Orders Versus Market Orders 469\u003c\/p\u003e \u003cp\u003eMarketable Limit Orders 470\u003c\/p\u003e \u003cp\u003eTrade Pricing Rules 471\u003c\/p\u003e \u003cp\u003eStop-Loss and Stop-Limit Orders 472\u003c\/p\u003e \u003cp\u003eTrailing Stop-Loss Orders 473\u003c\/p\u003e \u003cp\u003eMarket to Limit Orders 474\u003c\/p\u003e \u003cp\u003eEquivalence with Options 474\u003c\/p\u003e \u003cp\u003eValidity Conditions 475\u003c\/p\u003e \u003cp\u003eGood Till Canceled (GTC) Orders 475\u003c\/p\u003e \u003cp\u003eGood Till Days Orders 475\u003c\/p\u003e \u003cp\u003eOrders with Quantity Restrictions 476\u003c\/p\u003e \u003cp\u003eA Point on Order Specification 476\u003c\/p\u003e \u003cp\u003eOpen-Outcry Trading Systems 477\u003c\/p\u003e \u003cp\u003eElectronic Markets Versus Open-Outcry Markets 478\u003c\/p\u003e \u003cp\u003eCall Markets 479\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 The Macroeconomics of Financial Markets 481\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eEconomic Growth 481\u003c\/p\u003e \u003cp\u003eGross Domestic Product 481\u003c\/p\u003e \u003cp\u003e\u003ci\u003eConsumption \u003c\/i\u003e482\u003c\/p\u003e \u003cp\u003e\u003ci\u003eReal Estate \u003c\/i\u003e482\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCapital Expenditure \u003c\/i\u003e483\u003c\/p\u003e \u003cp\u003e\u003ci\u003eGovernment Spending \u003c\/i\u003e483\u003c\/p\u003e \u003cp\u003e\u003ci\u003eInventories \u003c\/i\u003e483\u003c\/p\u003e \u003cp\u003e\u003ci\u003eForeign Trade \u003c\/i\u003e483\u003c\/p\u003e \u003cp\u003eGDP Versus GNP 484\u003c\/p\u003e \u003cp\u003eInflation Adjustment 485\u003c\/p\u003e \u003cp\u003eTransnational Comparisons 485\u003c\/p\u003e \u003cp\u003eThe Big Mac Index 485\u003c\/p\u003e \u003cp\u003eInflation 485\u003c\/p\u003e \u003cp\u003eTypes of Inflation 486\u003c\/p\u003e \u003cp\u003eInterest Rates 488\u003c\/p\u003e \u003cp\u003eThe Federal Budget Deficit 488\u003c\/p\u003e \u003cp\u003eMeasures of Budget Deficits 489\u003c\/p\u003e \u003cp\u003eThe Primary Deficit 490\u003c\/p\u003e \u003cp\u003eFiscal Policy 490\u003c\/p\u003e \u003cp\u003eBudget Deficits and the Capital Market 490\u003c\/p\u003e \u003cp\u003eThe Role of the Central Bank 490\u003c\/p\u003e \u003cp\u003eBudget Deficits and Monetary Policy 491\u003c\/p\u003e \u003cp\u003eCross Border Borrowing 491\u003c\/p\u003e \u003cp\u003eCentral Banks and Foreign Exchange Markets 492\u003c\/p\u003e \u003cp\u003eSterilized and Unsterilized Interventions 493\u003c\/p\u003e \u003cp\u003eExchange Rates 493\u003c\/p\u003e \u003cp\u003eIssues with a Reserve Currency 494\u003c\/p\u003e \u003cp\u003eCross-border Implications of Central Bank Actions 494\u003c\/p\u003e \u003cp\u003eQuantitative Easing 495\u003c\/p\u003e \u003cp\u003eQuantitative Easing Versus Open-market Operations 496\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 Interest Rate Derivatives 497\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eForward Rate Agreements (FRAs) 497\u003c\/p\u003e \u003cp\u003eSettling an FRA 499\u003c\/p\u003e \u003cp\u003eDetermining Bounds for the FRA Rate 499\u003c\/p\u003e \u003cp\u003eEurodollar Futures 500\u003c\/p\u003e \u003cp\u003eCalculating Profits and Losses on ED Futures 501\u003c\/p\u003e \u003cp\u003eLocking in a Borrowing Rate 502\u003c\/p\u003e \u003cp\u003eLocking in a Lending Rate 503\u003c\/p\u003e \u003cp\u003eThe No-Arbitrage Pricing Equation 505\u003c\/p\u003e \u003cp\u003eCreating a Fixed-rate Loan 506\u003c\/p\u003e \u003cp\u003e30-year T-bond Futures Contracts 507\u003c\/p\u003e \u003cp\u003eConversion Factors 507\u003c\/p\u003e \u003cp\u003eInterest Rate Options 510\u003c\/p\u003e \u003cp\u003eState Prices 510\u003c\/p\u003e \u003cp\u003eCallable and Putable Bonds 511\u003c\/p\u003e \u003cp\u003eCaps, Floors, and Collars 512\u003c\/p\u003e \u003cp\u003eCaptions and Floortions 513\u003c\/p\u003e \u003cp\u003eSources and References 515\u003c\/p\u003e \u003cp\u003eIndex 521\u003c\/p\u003e","brand":"John Wiley \u0026 Sons Inc","offers":[{"title":"Default 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