Investment Analysis And Portfolio Management

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This book seeks to capture the essence of modern developments in investments and provides a guided tour of the intricate and complex world of investments. Written by a highly acknowledged author and expert, this book: Describes the characteristics of various investment alternatives available to investors Discusses how the securities market functions Explains the techniques used by professionals for analyzing and valuing investment alternatives Discusses the implications of modern research in the field of investments Explains how financial derivatives like futures and options are valued Presents a framework for portfolio management Provides insights into the strategies followed by the investment wizards of the world Sensitises the reader to the pitfalls in the investment game Offers a set of guidelines for investors with varying inclinations What's New in the Third Edition Two new chapters titled 'Investment in Real assets' (Chapter 20) and 'International Investing' (Chapter 24) have been added. 14 new sections have been included: 'Buying on Margin and Short Sale,' 'Generally Accepted Accounting Principles,' 'Multifactor Models,' 'Stock Market as a Complex Adaptive System,' 'Free Cash Flow Model,' 'Sum of the Parts Method,' 'Strategy Analysis,' 'Accounting Analysis,' 'Excellent Versus Unexcellent Companies,' 'Commodity Futures in India,' 'Tax Aspects of Mutual Fund Investment,' 'Benjamin Graham: The Quantitative Navigator,' 'Philip Fisher: The Investigative Growth Stock Investor,' and "India's Money Monarchs.' A number of boxes capturing valuable insights and important practices have been added. Investment Analysis and Portfolio Management is meant for: Investment practitioners like equity researchers, portfolio managers, and investment counsellors Lay investors interested in managing their investments in a rational and systematic manner MBA students taking a course on Investments (popularly called `Security Analysis and Portfolio Management?). To enhance the utility of the book, spreadsheet templates for students, additional problems and solutions manual and powerpoint presentation for students and instructors are available at http://highered.mcgraw Key Features What's New in the Third Edition Two new chapters titled 'Investment in Real assets' (Chapter 20) and 'International Investing' (Chapter 24) have been added. 14 new sections have been included: 'Buying on Margin and Short Sale,' 'Generally Accepted Accounting Principles,' 'Multifactor Models,' 'Stock Market as a Complex Adaptive System,' 'Free Cash Flow Model,' 'Sum of the Parts Method,' 'Strategy Analysis,' 'Accounting Analysis,' 'Excellent Versus Unexcellent Companies,' 'Commodity Futures in India,' 'Tax Aspects of Mutual FundInvestment,' 'Benjamin Graham: The Quantitative Navigator,' 'Philip Fisher: The Investigative Growth Stock Investor,' and "India's Money Monarchs.' A number of boxes capturing valuable insights and important practices have been added. About The Author Dr Prasanna Chandra, Director of Centre for Financial Management, is an MBA, PhD (Finance). He has over three decades of teaching experience in postgraduate and executive education programmes. He was a Professor of Finance at Indian Institute of Management, Bangalore, for nearly two decades. He was a visiting Professor of Finance at Southern IIinois University, USA, for two years. He has been a member of several committees including the Capital Issues Advisory Committee, the High Powered Committee on Insurance Sector Reforms, and the SEBI Committee on Derivatives. He has served or is serving on the boards of a number of organizations including Power Finance Corporation, Unit Trust of India, Investment Advisory Services Limited, Inter-Connected Stock Exchange of India, IFCI, IIM (B) , ICFAI, Templeton Mutual Fund, Bangalore Stock Exchange Limited, and Karnataka Soaps and Detergents Limited. He has been a consultant to many organizations. Dr Chandra has conducted executive seminars for a number of organizations like INDAL, Infosys, Telco, ITC,NIIT, TISCO, SAS, TATA-IBM, GTB, BHEL, Bharat Shell, ANZ Grindlays, HMT, Canara Bank, Vysya Bank, ONGC, Wipro, GAIL, Microsoft, Motorola, and Tyco Electronics. His other books include Financial Management: Theory and Practice, Investment, Analysis and Portfolio Management, Managing Investments, Finance Sense, Fundamentals of Financial Management, and Valuation of Equity Shares; and he has authored over 70 articles in professional journals and business periodicals. Dr Chandra has been a Fulbright Scholar and a UNDP Fellow. He has received several honours including the Best Teacher Award from the Association of Indian Management Schools. Table Of Contents Part I: Introduction Chapter 1. Overview: A Broad Map of the Territory Chapter 2. Investment Alternatives: Choices Galore Chapter 3. Securities Market: The Battlefield Part II: Basic Concepts and Methods Chapter 4. Risk and Return: Two Sides of the Investment Coin Chapter 5. The Time Value of Money: The Magic of Compounding Chapter 6. Financial Statement Analysis: The Information Maze Part III: Modern Portfolio Theory Chapter 7. Portfolio Theory: The Benefits of Diversification Chapter 8. Capital Asset Pricing Model and Arbitrage Pricing Theory: The Risk Reward Relationship Chapter 9. Efficient Market Hypothesis: The Collective Wisdom Chapter 10. Behavioural Finance: The Irrational Influences Part IV: Fixed Income Securities Chapter 11. Bond Prices and Yields: Figuring out the Assured Returns Chapter 12. Bond Portfolio Management: The Passive and Active Stances Part V: Equity Shares Chapter 13. Equity Valuation: How to Find Your Bearings Chapter 14. Macroeconomic and Industry Analysis: Understanding the Broad Picture Chapter 15. Company Analysis: Establishing the Value Benchmark Chapter 16. Technical Analysis: The Visual Clue Part VI: Derivatives Chapter 17. Options: The Upside without the Downside Chapter 18. Futures: Where the Hedgers and Speculators Meet Part VII: Other Investment Options Chapter 19. Mutual Funds: Indirect Investing Chapter 20. Investment in Real Assets: The Tangible Thing Part VIII: Portfolio Management Chapter 21. Portfolio Management Framework: The Grand Design Chapter 22. Guidelines for Investment Decisions: What It All Comes To Chapter 23. Strategies of the Great Masters: The Timeless Wisdom Chapter 24. International Investing: The Global Search Appendix A: Tables Appendix B: Regression Analysis Appendix C: Tax Aspects of Investments