Instructor’s Solutions Manual
to accompany
INVESTMENT ANALYSIS
and
PORTFOLIO MANAGEMENT
by Reilly, Brown, Hedges, and Chang
First Canadian Edition
RE: 0176478361 IRCD (IM/SM//TB/CTB)
COPYRIGHT © 2010 by Nelson Education Ltd.
For more information contact Nelson Education Ltd., 1120 Birchmount Road, Toronto, Ontario M1K 5G4. Or you
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Table of Contents
Part 1: The Investment Background
1
The Investment Setting ................................................................................................1
Web Appendix 1A: Review of Statistics and the Security Market Line ......................10
2
The Asset Allocation Decision .....................................................................................14
3
Selecting Investments in a Global Market ..................................................................19
4
Securities Markets and the Economy .........................................................................23
Part 2: Developments in Investment Theory
5
Efficient Capital Markets .............................................................................................39
6
An Introduction to Portfolio Management Markets ..................................................47
Appendix 6A: Proof that Minimum Portfolio Variance Occurs with
Equal Weights when Securities Have Equal Variance .................................................57
Appendix 6B: Derivation of Weights that Will Give Zero Variance when
Correlation Equals -1.00..............................................................................................57
7
Asset Pricing Models: CAPM and APT .........................................................................58
Part 3: Analysis and Management of Common Shares
8
Economic and Industry Analysis .................................................................................68
9
Company Analysis and Stock Valuation .....................................................................72
10
Technical Analysis ......................................................................................................79
Part 4: Analysis and Management of Bonds
11
Bond Fundamentals ....................................................................................................84
12
The Analysis and Valuation of Bonds ..........................................................................88
Part 5: Derivative Security Analysis
13
An Introduction to Derivative Markets and Securities ..............................................92
14
Derivatives: Analysis and Valuation ..........................................................................110
Part 6 Portfolio Management
15
Equity Portfolio Management Strategies .................................................................122
16
Bond Portfolio Management Strategies ...................................................................128
17
Professional Money Management, Alternative Assets, and Industry Ethics ............132
18
Evaluation of Portfolio Performance ........................................................................138
Part 7 Valuation Principles and Practices (www.reilly.nelson.com)
19
Analysis of Financial Statements ..............................................................................145
20
An Introduction to Security Valuation ......................................................................152
CFA Solutions .......................................................................................................................160