CHAPTER
1
What Is an Alternative Investment?
enitions of what constitutes an alternative investment vary substantially. One
reason for these differences lies in the purposes for which the denitions are being
used. But denitions also vary because alternati

CASE STUDY 1: SOLUTION
Periodic Income Calculation
Year 1
Potential Gross Income
Vacancy Rates
Misc. Income
Effective Gross Income
Operating Costs
Net Operating Income
Debt Service
Before Tax Cash Flows
Taxes From Operations
After Tax Cash Flows
Year 2
Ye

Questions for Chap 5, 6, 7 and 8
Chapter 5
1. A year ago, you invested $1,000 in a savings account that pays an annual interest
rate of 7%. What is your approximate annual real rate of return if the rate of inflation
was
3%
over
the
year?
A. 4%.
B. 10%.
C

Functions of the Financial System
Main functions of the Financial System are to facilitate:
Helps People achieve their purpose in using the Financial system
Financial Systems are used by people for six main reasons:
1. To save money for the future
2. To b

C H A P T E R
11
PORTFOLIO CONCEPTS
LEARNING OUTCOMES
After completing this chapter, you will be able to do the following:
MeanVariance Analysis
Define meanvariance analysis and list its assumptions.
Explain the concept of an efficient portfolio.
Calculat

CHAPTER
TIME-SERIES ANALYSIS
lEARNING OUTCOMES
After completing this chapter, you will be able to do the following:
. Compute the predicted trend value for a time series modeled as either a linear
trend or log-linear trend, given the estimated trend coeff

CHAPTER 9
INTRODUCTION TO INDUSTRY AND COMPANY
ANALYSIS
Presenter
Venue
Date
USES OF INDUSTRY ANALYSIS
Understanding a
companys business and
business environment
Identifying active equity
investment opportunities
Portfolio performance
attribution
APPROACH

CHAPTER 1
MARKET ORGANIZATION AND
STRUCTURE
Presenter
Venue
Date
WHAT ARE THE MAIN FUNCTIONS OF THE
FINANCIAL SYSTEM?
Save money for future use
Borrow money for current use
Raise equity capital
Manage risks
Exchange assets for immediate and
future deliver

CHAPTER
4
FREE CASH FLOW
VALUATION
LEARNING OUTCOMES
After completing this chapter, you will be able to do the following :
Dene and interpret free cash ow to the rm (FCFF) and free cash ow to equity
(FCFE).
Describe, compare, and contrast the FCFF and F

CHAPTER
9
INTRODUCTION TO
INDUSTRY AND
COMPANY ANALYSIS
Patrick W. Dorsey, CFA
Chicago, IL, U.S.A.
Anthony M. Fiore, CFA
New York City, NY, U.S.A.
Ian Rossa OReilly, CFA
Toronto, Canada
LEARNING OUTCOMES
After completing this chapter, you will be able to

CHAPTER
11
EQUITY MARKET
VALUATION
Peter C. Stimes, CFA
Altadena, CA, U.S.A.
Stephen E. Wilcox, CFA
Mankato, MN, U.S.A.
LEARNING OUTCOMES
After completing this chapter, you will be able to do the following:
Explain the terms of the Cobb-Douglas productio

CHAPTER
5
RESIDUAL INCOME
VALUATION
LEARNING OUTCOMES
After completing this chapter, you will be able to do the following :
Calculate and interpret residual income and related measures (e.g., economic value added
and market value added).
Discuss the use

Applied Econometrics
Applied Econometrics
Second edition
Dimitrios Asteriou and
Stephen G. Hall
Chapter 3:
Simple Regression
Applied Econometrics
Simple Regression
1. Introduction to the Classical Linear Regression
Model
2. The OLS Method of Estimation
3.

Applied Econometrics
Applied Econometrics
Second edition
Dimitrios Asteriou and
Stephen G. Hall
Chapter 9:
Dummy Variables
Applied Econometrics
Dummy Variables
1. Nature of qualitative information
2. Use of dummy variables
3. Special cases of dummy variab

Applied Econometrics
Applied Econometrics
Second edition
Dimitrios Asteriou and
Stephen G. Hall
Chapter 7:
Autocorrelation
Applied Econometrics
Autocorrelation
1. What is autocorrelation
2. What causes autocorrelation
3. First and higher orders
4. Consequ

CHAPTER 2
SECURITY MARKET INDICES
Presenter
Venue
Date
DESCRIPTION OF A SECURITY MARKET
INDEX
Constituent
securities
Security market
index
Price return index
Total return index
VALUE OF A PRICE RETURN INDEX
N
n P
i
VP RI
i
i 1
D
VPRI = the value of the p

CHAPTER 6
PORTFOLIO RISK AND RETURN: PART II
Presenter
Venue
Date
FORMULAS FOR PORTFOLIO RISK AND
RETURN
E Rp
2p
N
w
i 1
i
N
w E R
i
i 1
i
N
i 1, j 1
wi w j Cov(i , j )
1
Given: Cov(i, j ) ij i j and Cov(i, i) i2
Then: 2p
p
2p
N
2
2
w
i i
i 1
N
i

CHAPTER 17
Options Markets: Introduction
INVESTMENTS | BODIE, KANE,
MARCUS
20-2
Options
Derivatives are securities that get their
value from the price of other securities.
Derivatives are contingent claims
because their payoffs depend on the
value of ot

Derivatives
Lecture 3
Margin Accounts
Since buyers and sellers do not interact directly, there is
an incentive for either party to default if prices move
adversely.
To inhibit default, futures exchanges use margin
accounts.
This is effectively the posti

Introduction to Derivatives
August 2012
Lecture 1
What is a Derivative?
The term derivative indicates that it has no independent
value
Value is entirely derived from the value of an underlying
asset
DERIVATIVE
Derives value from
Underlying
asset
Securi

Derivatives Introduction
For your information
Options
Derivatives are securities that get their
value from the price of other securities.
Derivatives are contingent claims because
their payoffs depend on the value of other
securities.
Options are trade

I guess I should warn you, if I turn
out to be particularly clear, youve
probably misunderstood what Ive
said Alan Greenspan
1
Chapter 20
Swaps and Hedging
2
Some say.
Derivatives are Financial
Weapons of Mass
Destruction, carrying dangers
that, while now

he B
T
:
8
1
r
Chapte
l ac
BSM)
(
l
e
d
o
es M
l
o
h
c
S
k
The Black-Scholes Model
The Black-Scholes model is unambiguously the best known model of option pricing.
It is also one of the most widely used: it is the benchmark model for pricing options
on:
E

Forex
Spot Market Transactions
Part 2
Investment Management 3A
Recap from yesterday
Types of Exchange Rate Systems
Reasons for the FX Market
Exchange Rate
Parity Conditions
Spot Rates
Quoting Spot Rates
Market Maker / market user
Bid and Offer
The Spre

3B
s
t
n
e
m
t
Inves
tion)
c
u
d
1
o
r
e
t
r
n
t s (I
Lectu
n
e
m
t
s
e
ive Inv
t
a
n
r
e
t
l
A
Alternative Investments - Introduction
What are common asset classes found in the
financial market?
What are alternative asset classes / alternative
assets /

m en
t
s
e
v
n
I
rnative
e
t
l
A
f
o
Analysis
i ons
t
s
e
u
Q
3
Lecture
ts
Answers to last classs questions
1. An investment company that invests primarily in stock with high price-toearnings ratios is pursuing a:
A. Style strategy
A style strategy concen

nts
e
m
t
s
e
v
ive In
t
a
n
r
e
t
l
A
i ons
t
s
e
u
Q
1
Lecture
Question 1
What is the NAV for XYZ Pty Ltd, based on the following information:
Assets
Liabilities
Shares Outstanding
Base Management Fee
R 10,000,000.00
R1,000,000.00
500,000
0.75%
Question

CHAPTER 4
PORTFOLIO MANAGEMENT:
AN OVERVIEW
Presenter
Venue
Date
THE PORTFOLIO PERSPECTIVE
Stock
X
Evaluate
in
isolation?
Stock
Y
Stock X
and
Stock Y
Evaluate as a
portfolio?
EXHIBIT 4-3 CUMULATIVE WEALTH INDEX OF
SAMPLE OF SHARES LISTED ON HKSE
Source: D

Applied Econometrics
Applied Econometrics
Second edition
Dimitrios Asteriou and
Stephen G. Hall
Chapter 8:
Misspecification
Applied Econometrics
Misspecification
1. Omitting influential or including non-influential
explanatory variables
2. Various functio