Description: 1.Introduction 1.1. Cash Flows 1.2. Investments and Markets 1.3. Typical Investment Problems 1.4. Organization of the Book I. Deterministic Cash Flow Streams 2. The Basic Theory of Interest 2.1. Principal and Interest 2.2. Present Value 2.3. Present and Future Values of Streams 2.4. Internal Rate of Return 2.5. Evaluation Criteria 2.6. Applications and Extensions 2.7. Summary 2.8. Exercises 3. Fixed-Income Securities 3.1. The Market for Future Cash 3.2. Value Formulas 3.3. Bond Details 3.4. Yield 3.5. Duration 3.6. Immunization 3.7. Convexity 3.8. Summary 3.9. Exercises 4. The Term Structure of Interest Rates 4.1. The Yield Curve 4.2. The Term Structure 4.3. Forward Rates 4.4. Term Structure Explanations 4.5. Expectation Dynamics 4.6. Running Present Value 4.7. Floating Rate Bonds 4.8. Duration 4.9. Immunization 4.10. Summary 4.11. Exercises 5. Applied Interest Rate Analysis 5.1. Capital Budgeting 5.2. Optimal Portfolios 5.3. Dynamic Cash Flow Processes 5.4. Optimal Management 5.5. The Harmony Theorem 5.6. Valuation of a Firm 5.7. Summary 5.8. Exercises II. Single-Period Random Cash Flows 6. Mean-Variance Portfolio Theory 6.1. Asset Return 6.2. Random Variables 6.3. Random Returns 6.4. Portfolio Mean and Variance 6.5. The Feasible Set 6.6. The Markowitz Model 6.7. The Two-Fund Theorem 6.8. Inclusion of a Risk-Free Asset 6.9. The One-Fund Theorem 6.10. Summary 6.11. Exercises 7. The Capital Asset Pricing Model 7.1. Market Equilibrium 7.2. The Capital Market Line 7.3. The Pricing Model 7.4. The Security Market Line 7.5. Investment Implications 7.6. Performance Evaluation 7.7. CAPM as a Pricing Formula 7.8. Project Choice 7.9. Summary 7.10. Exercises 8. Models and Data 8.1. Introduction 8.2. Factor Models 8.3. The CAPM as a Factor Model 8.4. Arbitrage Pricing Theory 8.5. Data and Statistics 8.6. Estimation of Other Parameters 8.7. Tilting Away from Equilibrium 8.8. A Multiperiod Fallacy 8.9. Summary 8.10. Exercises 9. General Principles 9.1. Introduction 9.2. Utility Functions 9.3. Risk Aversion 9.4. Specification of Utility Functions 9.5. Utility Functions and the Mean-Variance Criterion 9.6. Linear Pricing 9.7. Portfolio Choice 9.8. Log-Optimal Pricing 9.9. Finite State Models 9.10. Risk-Neutral Pricing 9.11. Pricing Alternatives 9.12. Summary 9.13. Exercises III. Derivative Securities 10. Forwards, Futures, and Swaps 10.1. Introduction 10.2. Forward Contracts 10.3. Forward Prices 10.4. The Value of a Forward Contract 10.5. Swaps 10.6. Basics of Futures Contracts 10.7. Futures Prices 10.8. Relation to Expected Spot Price 10.9. The Perfect Hedge 10.10. The Minimum-Variance Hedge 10.11. Optimal Hedging 10.12. Hedging Nonlinear Risk 10.13. Summary 10.14. Exercises 11. Models of Asset Dynamics 11.1. Binominal Lattice Model 11.2. The Additive Model 11.3. The Multiplicative Model 11.4. Typical Parameter Values 11.5. Lognormal Random Variables 11.6. Random Walks and Wiener Processes 11.7. A Stock Price Process 11.8. Ito's Lemma 11.9. Binomial Lattice Revisited 11.10. Summary 11.11. Exercises 11.12. References 12. Basic Options Theory 12.1. Option Concepts 12.2. The Nature of Option Value 12.3. Option Combinations and Put-Call Parity 12.4. Early Exercise 12.5. Single-Period Binomial Options Theory 12.6. Multiperiod Options 12.7. More General Binomial Problems 12.8. Evaluating Real Investment Opportunities 12.9. General Risk-Neutral Pricing 12.10. Summary 12.11. Exercises 12.12. References 13. Addit

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