Higher Education

MindTap for Investment Analysis & Portfolio Management

Author(s): Frank Reilly | Keith C. Brown | Sanford J. Leeds

ISBN: 9781337675536

11th Edition

Copyright: 2019

India Release: 2020


Binding: eBook

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Used extensively by professionals, organizations and schools across the country, Reilly/Brown/Leeds' INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT, 11th Edition, combines solid theory with practical applications to help students learn how to manage their money to maximize their earning potential. It also offers expanded discussions of the impact of changes in both technology and regulations on the functioning and organization of global security markets and devotes three chapters to derivatives securities.

*Special prices for countries of South-Asia

  • Unrivaled Domestic and Global Insight: The 11th edition continues its tradition of unparalleled international coverage. Investing knows no borders, and while the total integration of domestic and global investment opportunities may seem to contradict the need for separate discussions of international issues, it actually makes the need for specific information on non-U.S. markets, instruments, conventions and techniques even more compelling--and this text delivers with comprehensive coverage.
  • Expanded Tech/Reg Coverage: Both technology and regulations have caused more significant changes in the functioning and organization of global security markets in the last decade than in the prior 50 years. Chapter 3 provides a detailed discussion of this evolution and the results for global markets, while Chapter 2 describes how specific security innovations and asset allocation practices have been affected by these changes.
  • Derivative Securities Emphasis: In today's market, derivative securities are not exotic anomalies but standard investment instruments--a reality reflected in the 11th edition. Three entire chapters are devoted to derivatives, equipping readers with intuitive, clear discussions of the different instruments, their markets, valuation, trading strategies and general use as risk management and return enhancement tools.

PART 1 The Investment Background

Chapter 1 The Investment Setting

What Is an Investment?

Measures of Return and Risk

Determinants of Required Rates of Return

Relationship between Risk and Return

Chapter 1 Appendix: Computation of Variance and Standard Deviation


Chapter 2 Asset Allocation and Security Selection

Individual Investor Life Cycle

The Portfolio Management Process

The Need for a Policy Statement

Input to the Policy Statement

Constructing the Policy Statement

The Importance of Asset Allocation

The Case for Global Investments

Historical Risk-Returns on Alternative Investments

Chapter 2 Appendix:

A. Covariance

B. Correlation


Chapter 3 Organization and Functioning of Securities Markets

What Is a Market?

Primary Capital Markets

Secondary Financial Markets

Classification of U.S. Secondary Equity Markets

Alternative Types of Orders Available


Chapter 4 Security Market Indexes and Index Funds

Uses of Security Market Indexes

Differentiating Factors in Constructing Market Indexes

Stock Market Indexes

Bond Market Indexes

Composite Stock–Bond Indexes

Comparison of Indexes over Time

Investing in Security Market Indexes

Chapter 4 Appendix: Stock Market Indexes


PART 2 Developments in Investment Theory

Chapter 5 Efficient Capital Markets, Behavioral Finance, and Technical Analysis

Efficient Capital Markets

Behavioral Finance

Implications of Efficient Capital Markets

Technical Analysis

Advantages of Technical Analysis

Challenges to Technical Analysis

Technical Trading Rules and Indicators


Chapter 6 An Introduction to Portfolio Management

Some Background Assumptions

The Markowitz Portfolio Theory

The Efficient Frontier

Capital Market Theory: An Overview

Chapter 6 Appendix:

A. Proof That Minimum Portfolio Variance Occurs with Equal Investment Weights When Securities Have Equal Variance

B. Derivation of Investment Weights That Will Give Zero Variance When Correlation Equals 1.00


Chapter 7 Asset Pricing Models

The Capital Asset Pricing Model

Empirical Tests of the CAPM

The Market Portfolio: Theory versus Practice

Arbitrage Pricing Theory

Multifactor Models and Risk Estimation


PART 3 Valuation and Management of Common Stocks

Chapter 8 Equity Valuation

Important Distinctions

An Introduction to Discounted Cash Flow and Relative Valuation

Discounted Cash Flow

Relative Valuation

Ratio Analysis

The Quality of Financial Statements

Moving on to Chapter 9

Chapter 8 Appendix: Derivation of Constant-Growth Dividend Discount Model (DDM)


Chapter 9 The Top-Down Approach to Market, Industry, and Company Analysis

Introduction to Market Analysis

Aggregate Market Analysis (Macroanalysis)

Microvaluation Analysis

Introduction to Industry Analysis: Why Industry Analysis Matters

Industry Analysis

Estimating Industry Rates of Return

Global Industry Analysis

Company Analysis

Connecting Industry Analysis to Company Analysis

Calculating Intrinsic Value

Lessons from Some Legends


Chapter 10 The Practice of Fundamental Investing

Initial Public Offerings

Buy-Side Analysts and Sell-Side Analysts

Capital Allocation

Corporate Governance

Creating a Stock Pitch

Chapter 10 Appendix:

A. Why Air Lease Should Soon Be Flying High

B. The Plane Truth

Chapter 11 Equity Portfolio Management Strategies

Passive versus Active Management

An Overview of Passive Equity Portfolio Management Strategies

An Overview of Active Equity Portfolio Management Strategies

Value versus Growth Investing: A Closer Look

An Overview of Style Analysis

Asset Allocation Strategies


PART 4 Valuation and Management of Bonds

Chapter 12 Bond Fundamentals and Valuation

Basic Features of a Bond

The Global Bond Market Structure

Survey of Bond Issues

Bond Yield Curves

Bond Valuation


Chapter 13 Bond Analysis and Portfolio Management Strategies

Bond Analysis Tools

An Overview of Bond Portfolio Management: Performance, Style, and Strategy

Passive Management Strategies

Active Management Strategies

Core-Plus Management Strategies

Matched-Funding Management Strategies

Contingent and Structured Management Strategies

Chapter 13 Appendix: Closed-Form Equation for Calculating Macaulay Duration


PART 5 Derivative Security Analysis

Chapter 14 An Introduction to Derivative Markets and Securities

Overview of Derivative Markets

Investing with Derivative Securities

The Relationship between Forward and Option Contracts

An Introduction to the Use of Derivatives in Portfolio Management


Chapter 15 Forward, Futures, and Swap Contracts

An Overview of Forward and Futures Trading

Hedging with Forwards and Futures

Forward and Futures Contracts: Basic Valuation Concepts

Financial Forwards and Futures: Applications and Strategies

OTC Forward Contracts

Chapter 15 Appendix: Calculating Money Market Implied Forward Rates


Chapter 16 Option Contracts

An Overview of Option Markets and Contracts

The Fundamentals of Option Valuation

Option Valuation: Extensions

Option Trading Strategies

Other Option Applications


PART 6 Analysis and Evaluation of Asset Management

Chapter 17 Professional Portfolio Management, Alternative Assets, and Industry Ethics

The Asset Management Industry: Structure and Evolution

Private Management and Advisory Firms

Organization and Management of Investment Companies

Investing in Alternative Asset Classes

Ethics and Regulation in the Professional Asset Management Industry

What Do You Want from a Professional Asset Manager?


Chapter 18 Evaluation of Portfolio Performance

The Two Questions of Performance Measurement

Simple Performance Measurement Techniques

Risk-Adjusted Portfolio Performance Measures

Application of Portfolio Performance Measures

Holdings-Based Portfolio Performance Measures

The Decomposition of Portfolio Returns

Factors That Affect Use of Performance Measures

Reporting Investment Performance

Appendix A The CFA® Charter

Appendix B Code of Ethics and Standards of Professional Conduct

Appendix C Interest Tables

Appendix D Standard Normal Probabilities

Comprehensive References List



Frank K. Reilly, University of Notre Dame

Frank K. Reilly, a Chartered Financial Analyst (CFA), is the Bernard J. Hank Professor of Finance, Mendoza College of Business, University of Notre Dame, where he served as dean from 1981-1987. Prior to 1981, Dr. Reilly was a professor at the University of Illinois at Urbana-Champaign, the University of Wyoming, and the University of Kansas. Recently, he was part of the inaugural group selected as a fellow of the Financial Management Association International. At the 2001 AIMR annual meeting in Los Angeles, he received the Daniel J. Forrestal III Leadership Award for Professional Ethics and Standards of Investment Practice. Among his other honors, Professor Reilly was included in the list of Outstanding Educators in America, received the Alumni Excellence in Graduate Teaching Award and the Outstanding Educator Award from the M.B.A. class at the University of Illinois, the Outstanding Teachers Award from the M.B.A. class at the University of Notre Dame, and the Faculty Award from the University of Notre Dame. He received his B.B.A. at the University of Notre Dame, his M.B.A. at Northwestern University, and his Ph.D. at the University of Chicago.


Keith C. Brown, University of Texas at Austin

Keith C. Brown, a Chartered Financial Analyst (CFA), is the Jack S. Josey Professor, University Distinguished Teaching Professor, and Fayez Sarofim Fellow at the McCombs School of Business at the University of Texas at Austin, where he teaches Investments, Portfolio Management and Security Analysis, Capital Markets, and Derivatives courses at the BBA and MBA levels. He is president and CEO of The MBA Investment Fund, LLC, a private capital appreciation fund managed by UT graduate students, and the former director of the department's Hicks, Muse, Tate & Furst Center for Private Equity Finance. Professor Brown is cofounder and senior partner of Fulcrum Financial Group, a portfolio management and investment advisory firm located in Austin, Texas, and Las Vegas, Nevada. He serves as an advisor to the boards of the Teacher Retirement System of Texas and the University of Texas Investment Management Company. He is an associate editor for the JOURNAL OF INVESTMENT MANAGEMENT and the JOURNAL OF BEHAVIORAL FINANCE. He received his B.A. from San Diego State University and his M.S. and Ph.D. from Purdue University.


Sanford J. Leeds, University of Texas at Austin

Sanford J. Leeds is a distinguished senior lecturer at the University of Texas' McCombs School of Business, where he has been a member of the faculty for 16 years. For 13 of those years, he also served as president of The MBA Investment Fund LLC, a privately funded investment company managed by graduate students at the University of Texas. Professor Leeds' numerous teaching awards include three schoolwide awards: the Joe D. Beasley Teaching Award, the CBA Foundation Advisory Council Award for Teaching Innovation and the Jim Nolen Award for Excellence in Graduate Teaching. His recognition from his students includes multiple Outstanding MBA Professor Awards and Outstanding MSF Professor Awards. In 2015, he was selected to be a Provost Teaching Fellow and served on the steering committee of that organization. He currently serves as a Senior Provost Fellow. He received a B.S. in Investment Analysis from the University of Alabama, an MBA from the University of Texas and a J.D. from the University of Virginia. Professor Leeds received the Chartered Financial Analyst designation in 1998. He has served the CFA Institute as a grader, a member of the Candidate Curriculum Committee and an editor of a candidate reading section. He is also a member of the Texas State Bar.