Finance: Capital Markets, Financial Management, and Investment Management

Preface

Recent financial events have emphasized the need for an understanding of financial decision-making, financing instruments, and strategies used in financial and investment management. In this book, we provide an introduction to these topics in the field of finance.

We begin our introduction to finance in Part One, where we introduce you to financial mathematics and financial analysis. These are the basic tools of finance that span investment and financing decision-making.

In Part Two, we develop the fundamentals of capital market theory and discuss financial markets, financial intermediaries, and regulators of financial activities. Knowledge of capital markets and how assets are priced is essential to decision-making that involves raising capital in the markets or investing capital. In this part, we also cover the basics of interest rates, bond and stock valuation, asset pricing theory, and derivative instruments.

We present the decision-making within a business enterprise in Part Three. These decisions include capital budgeting—that is, whether or not to invest in specific long-lived projects—and capital structure—that is, how to finance the business. In this part, we also discuss the management of current assets and risk management.

In Part Four, we cover the basics of investment decision-making, beginning with the determination of an investment objective and then proceeding to discuss and demonstrate portfolio theory and performance evaluation. In addition, we discuss ...