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This invaluable book is a must-have for investors looking to build and sharpen their capital markets intuition and critical thinking skills for investment decisions. The central aim of this comprehensive guide is to help investors develop these essential abilities. This 14th revised edition is the culmination of over 25 years of in-depth investment research and practical experience, alongside 20 meticulous years of rigorous testing in university classrooms.
While the main focus of this book is applied investments, it seamlessly integrates aspects of finance, economics, accounting, pure mathematics, statistics, numerical techniques, and spreadsheets or programming. This makes it the perfect capstone course for advanced undergraduates or those pursuing a masters/MBA. The book leans towards a scientific/quantitative approach, yet it remains accessible to a motivated practitioner or a talented individual investor with a basic understanding of high school or intermediate level university mathematics.
Although primarily designed for advanced undergraduates or masters/MBA students, the book’s detailed explanations of a broad spectrum of advanced capital markets topics make it an excellent resource for U.S. PhD students seeking a straightforward foundation in capital markets theory and practice. It offers literature reviews in multiple advanced areas and identifies over 30 open research questions, ideal for a master’s thesis or a PhD chapter.
The practical nature of the book makes it an ideal choice for capital markets practitioners. For instance, one exercise guides the reader through the process of constructing an active alpha optimization using real stock market data. Other practical content includes advanced time value of money exercises, a review of retirement topics, in-depth discussions on dividends, P/E ratios, transaction costs, the CAPM, and comparisons of value, growth, glamour, and income. It also provides a review of more than a century’s worth of stock market performance and over two centuries of interest rates.
To reinforce key concepts, there are 75 ‘Quant Quizzes’ that contain over 100 individual questions. Additionally, there are more than 10 ‘You Need to Know’ boxes, each focusing on a crucial