PART ONE INTRODUCTION1 1The Investment Environment 3 2 Financial Instruments 33 3 How Securities are Traded 67 4 Mutual Funds and Other Investment Companies109 PART TWO PORTFOLIO THEORY139 5 History of Interest Rates and Risk Premiums141 6 Risk and Risk Aversion 171 7 Capital Allocation Between the Risky Asset and the Risk-Free Asset 203 8 Optimal Risky Portfolios 229 PART FIVE SECURITY ANALYSIS 579 17 Macroeconomic and Industry Analysis 581 18 Equity Valuation Models 615 19 Financial Statement Analysis 671 PART SIX OPTIONS, FUTURES, AND OTHER DERIVATIVES 717 20 Options Markets: Introduction 719 21 Option Valuation 767 22 Futures Markets 813 23 Futures and Swaps: A Closer Look 843 PART SEVEN ACTIVE PORTFOLIO MANAGEMENT 881 883 287 9 The Capital Asset Pricing Model 289 10 Index Models 325 11 Arbitrage Pricing Theory and Multifactor Models of Risk and Return 351 12 Market Efficiency and Behavioral Finance 377 13 Empirical Evidence on Security Returns 423 PART FOUR FIXED-INCOME SECURITIES 455 14 Bond Prices and Yields 457 15 The Term Structure of Interest Rates 16 Managing Bond Portfolios 529 497 PART THREE EQUILIBRIUM IN CAPITAL MARKETS 24 Portfolio Performance Evaluation 25 International Diversification 927 26 The Process of Portfolio Management 961 27 The Theory of Active Portfolio Management 1001 Appendix A 1025 Quantitative Review Appendix B CFA Questions1063 Glossary 1067 Name Index 1081 Subject Index 1085