Investments, Thirteenth Edition
By Zvi Bodie, Alex Kane and Alan J. Marcus
Contents:
Preface xvi
PART I
Introduction 1
Chapter 1
The Investment Environment 1
1.1 Real Assets versus Financial Assets 2
1.2 Financial Assets 3
1.3 Financial Markets and the Economy 5
The Informational Role of Financial Markets /
Consumption Timing / Allocation of Risk / Separation of
Ownership and Management / Corporate Governance
and Corporate Ethics
1.4 The Investment Process 10
1.5 Markets Are Competitive 11
The Risk–Return Trade-Off / Efficient Markets
1.6 The Players 13
Financial Intermediaries / Investment Bankers /
Venture Capital and Private Equity / Fintech,
Financial Innovation, and Decentralized
Finance
Robo Advice / Blockchains / Cryptocurrencies /
Digital Tokens / Digital Currency
1.7 The Financial Crisis of 2008–2009 19
Antecedents of the Crisis / Changes in Housing Finance /
Mortgage Derivatives / Credit Default Swaps / The Rise
of Systemic Risk / The Shoe Drops / The Dodd–Frank
Reform Act
1.8 Outline of the Text 27
End of Chapter Material 27–30
Chapter 2
Asset Classes and Financial Instruments 31
2.1 The Money Market 31
Treasury Bills / Certificates of Deposit / Commercial
Paper / Bankers’ Acceptances / Eurodollars / Repos and
Reverses / Federal Funds / Brokers’ Calls / LIBOR and
Its Replacements / Yields on Money Market Instruments /
Money Market Funds
2.2 The Bond Market 37
Treasury Notes and Bonds / Inflation-Protected Treasury
Bonds / Federal Agency Debt / International Bonds /
Municipal Bonds / Corporate Bonds / Mortgage and
Asset-Backed Securities
2.3 Equity Securities 44
Common Stock as Ownership Shares / Characteristics of
Common Stock / Stock Market Listings / Preferred Stock /
Depositary Receipts
2.4 Stock and Bond Market Indexes 47
Stock Market Indexes / Dow Jones Industrial Average
/ The Standard & Poor’s 500 Index / Russell Indexes /
Other U.S. Market-Value Indexes / Equally Weighted
Indexes / Foreign and International Stock Market Indexes
/ Bond Market Indicators
2.5 Derivative Markets 54
Options / Futures Contracts
End of Chapter Material 56–60
Chapter 3
How Securities Are Traded 61
3.1 How Firms Issue Securities 61
Privately Held Firms / Publicly Traded Companies / Shelf
Registration / Initial Public Offerings / SPACs versus
Traditional IPOs
3.2 How Securities Are Traded 67
Types of Markets
Direct Search Markets / Brokered Markets / Dealer
Markets
/ Auction Markets
Types of Orders
Market Orders / Price-Contingent Orders
Trading Mechanisms
Dealer Markets / Electronic Communication Networks
(ECNs) / Specialist/DMM Markets
3.3 The Rise of Electronic Trading 72
3.4 U.S. Markets 74
NASDAQ / The New York Stock Exchange / ECNs
3.5 New Trading Strategies 76
Algorithmic Trading / High-Frequency Trading / Dark
Pools / Internalization / Bond Trading
3.6 Globalization of Stock Markets 80
3.7 Trading Costs 81
3.8 Buying on Margin 82
3.9 Short Sales 85
3.10 Regulation of Securities Markets 89
Self-Regulation / The Sarbanes-Oxley Act /
Insider Trading
End of Chapter Material 93–98
Chapter 4
Mutual Funds and Other Investment
Companies 99
4.1 Investment Companies 99
4.2 Types of Investment Companies 100
Unit Investment Trusts / Managed Investment
Companies / Exchange-Traded Funds / Other Investment
Organizations
Commingled Funds / Real Estate Investment Trusts
(REITs) / Hedge Funds
4.3 Mutual Funds 104
Investment Policies
Money Market Funds / Equity Funds / Sector
Funds / Bond Funds / International Funds /
Balanced Funds / Asset Allocation and Flexible
Funds / Index Funds
How Funds Are Sold
4.4 Costs of Investing in Mutual Funds 107
Fee Structure
Operating Expenses / Front-End Load / Back-End
Load / 12b-1 Charges
Fees and Mutual Fund Returns
4.5 Taxation of Mutual Fund Income 111
4.6 Exchange-Traded Funds 112
4.7 Mutual Fund Investment Performance:
A First Look 115
4.8 Information on Mutual Funds 116
End of Chapter Material 119–124
PART II
Portfolio Theory
and Practice 125
Chapter 5
Risk, Return, and the Historical
Record 125
5.1 Measuring Returns over Different Holding Periods 126
Annual Percentage Rates / Continuous Compounding
5.2 Interest Rates and Inflation Rates 129
Real and Nominal Rates of Interest / The Equilibrium
Real Rate of Interest / Interest Rates and Inflation /
Taxes and the Real Rate of Interest / Treasury Bills and
Inflation, 1926–2021
5.3 Risk and Risk Premiums 133
Holding-Period Returns / Expected Return and Standard
Deviation / Excess Returns and Risk Premiums / The
Reward-to-Volatility (Sharpe) Ratio
5.4 The Normal Distribution 137
5.5 Deviations from Normality and Tail Risk 140
Value at Risk / Expected Shortfall / Lower Partial
Standard Deviation and the Sortino Ratio / Relative
Frequency of Large, Negative 3-Sigma Returns
5.6 Learning from Historical Returns 143
Time Series versus Scenario Analysis / Expected Returns
and the Arithmetic Average / The Geometric (Time-
Weighted) Average Return / Estimating Variance and
Standard Deviation / Mean and Standard Deviation
Estimates from Higher-Frequency Observations
5.7 Historic Returns on Risky Portfolios 147
A Global View of the Historical Record
5.8 Normality and Long-Term Investments 156
Short-Run versus Long-Run Risk / Forecasts for the
Long Haul
End of Chapter Material 160–166
Chapter 6
Capital Allocation to Risky Assets 167
6.1 Risk and Risk Aversion 168
Risk, Speculation, and Gambling / Risk Aversion and
Utility Values / Estimating Risk Aversion
6.2 Capital Allocation across Risky and Risk-Free
Portfolios 173
6.3 The Risk-Free Asset 176
6.4 Portfolios of One Risky Asset and a Risk-Free
Asset 176
6.5 Risk Tolerance and Asset Allocation 179
Non-normal Returns
6.6 Passive Strategies: The Capital Market Line 185
End of Chapter Material 187–195
Appendix A: Risk Aversion, Expected Utility, and the
St. Petersburg Paradox 196
Chapter 7
Efficient Diversification 201
7.1 Diversification and Portfolio Risk 202
7.2 Portfolios of Two Risky Assets 203
7.3 Asset Allocation with Stocks, Bonds, and Bills 211
Asset Allocation with Two Risky Asset Classes
7.4 The Markowitz Portfolio Optimization Model 216
Security Selection / Capital Allocation and the
Separation Property / The Power of Diversification /
Asset Allocation and Security Selection
7.5 Risk Pooling, Risk Sharing, and Time
Diversification 225
Risk Sharing versus Risk Pooling / Time Diversification
End of Chapter Material 228–238
Appendix A: A Spreadsheet Model for Efficient
Diversification 238
Appendix B: Review of Portfolio Statistics 243
Chapter 8
Index Models 251
8.1 A Single-Factor Security Market 252
The Input List of the Markowitz Model / Systematic
versus Firm-Specific Risk
8.2 The Single-Index Model 254
The Regression Equation of the Single-Index Model /
The Expected Return–Beta Relationship / Risk and
Covariance in the Single-Index Model / The Set of
Estimates Needed for the Single-Index Model / The Index
Model and Diversification
8.3 Estimating the Single-Index Model 261
The Security Characteristic Line for U.S. Steel / The
Explanatory Power of U.S. Steel’s SCL / The Estimate of
Alpha / The Estimate of Beta / Firm-Specific Risk
Typical Results from Index Model Regressions
8.4 The Industry Version of the Index Model 265
Predicting Betas
8.5 Portfolio Construction Using the Single-Index
Model 268
Alpha and Security Analysis / The Index Portfolio as an
Investment Asset / The Single-Index Model Input List /
The Optimal Risky Portfolio in the Single-Index Model /
The Information Ratio / Summary of Optimization
Procedure / An Example / Correlation and Covariance
Matrix
Risk Premium Forecasts / The Optimal Risky Portfolio /
Is the Index Model Inferior to the Full-Covariance
Model?
End of Chapter Material 277–282
PART III
Equilibrium in Capital
Markets 283
Chapter 9
The Capital Asset Pricing Model 283
9.1 The Capital Asset Pricing Model 283
The Market Portfolio / The Passive Strategy Is Efficient
/ The Risk Premium of the Market Portfolio / Expected
Returns on Individual Securities / The Security Market
Line / The CAPM and the Single-Index Market
9.2 Assumptions and Extensions of the CAPM 294
Identical Input Lists / Risk-Free Borrowing and the
Zero-Beta Model / Labor Income and Other Nontraded
Assets / A Multiperiod Model and Hedge Portfolios / A
Consumption-Based CAPM / Liquidity and the CAPM
9.3 Issues in Testing the CAPM 304
9.4 The CAPM and the Investment Industry 305
End of Chapter Material 306–314
Chapter 10
Arbitrage Pricing Theory
and Multifactor Models of Risk
and Return 315
10.1 Multifactor Models: A Preview 316
Factor Models of Security Returns
10.2 Arbitrage Pricing Theory 318
Arbitrage, Risk Arbitrage, and Equilibrium / Diversification
in a Single-Factor Security Market / Well-Diversified
Portfolios / The Security Market Line of the APT
Individual Assets and the APT
Well-Diversified Portfolios in Practice
10.3 The APT and the CAPM 326
10.4 A Multifactor APT 326
10.5 The Fama-French (FF) Three-Factor Model 329
Estimating and Implementing a Three-Factor SML /
Extensions of the Three-Factor Model: A First Look /
Smart Betas and Multifactor Models
End of Chapter Material 334–340
Chapter 11
The Efficient Market Hypothesis 341
11.1 Random Walks and Efficient Markets 342
Competition as the Source of Efficiency / Versions of the
Efficient Market Hypothesis
11.2 Implications of the EMH 346
Technical Analysis / Fundamental Analysis / Active versus
Passive Portfolio Management / The Role of Portfolio
Management in an Efficient Market / Resource Allocation
11.3 Event Studies 351
11.4 Are Markets Efficient? 354
The Issues
The Magnitude Issue / The Selection Bias Issue / The
Lucky Event Issue
Weak-Form Tests: Patterns in Stock Returns
Returns over Short Horizons / Returns over Long Horizons
Predictors of Broad Market Returns / Semistrong Tests:
Market Anomalies
The Small-Firm Effect / The Neglected-Firm and
Liquidity Effects / Book-to-Market Ratios / Post–
Earnings-Announcement Price Drift / Other Predictors
of Stock Returns
Strong-Form Tests: Inside Information / Interpreting the
Anomalies
Risk Premiums or Inefficiencies? / Anomalies or Data
Mining? / Anomalies over Time
Bubbles and Market Efficiency
11.5 Mutual Fund and Analyst Performance 368
Stock Market Analysts / Mutual Fund Managers / So, Are
Markets Efficient?
End of Chapter Material 374–380
Chapter 12
Behavioral Finance and Technical
Analysis 381
12.1 The Behavioral Critique 382
Information Processing
Limited Attention, Underreaction, and Overreaction /
Overconfidence / Conservatism / Confirmation Bias /
Extrapolation and Pattern Recognition
Behavioral Biases
Framing / Mental Accounting / Regret Avoidance /
Affect and Feelings / Prospect Theory
Limits to Arbitrage
Fundamental Risk / Implementation Costs / Model Risk
Limits to Arbitrage and the Law of One Price
“Siamese Twin” Companies / Equity Carve-Outs /
Closed-End Funds
Bubbles and Behavioral Economics / Evaluating the
Behavioral Critique
12.2 Technical Analysis and Behavioral Finance 394
Trends and Corrections
Momentum and Moving Averages / Relative Strength /
Breadth
Machine Leaning and Technical Analysis / Sentiment
Indicators
Trin Statistic / Confidence Index / Short Interest / Put/
Call Ratio
A Warning
End of Chapter Material 401–408
Chapter 13
Empirical Evidence on Security Returns 409
13.1 Two-Pass Tests of Asset Pricing 410
Testing the Single-Factor SML
Setting Up the Sample Data / Estimating the SCL /
Estimating the SML
The Market Index / Measurement Error in Beta
13.2 Tests of the Multifactor Models 415
Labor Income / Private (Nontraded) Business /
Macroeconomic Risk Factors
13.3 Fama-French-Type Factor Models 419
Size and B/M as Risk Factors / Behavioral Explanations /
Momentum: A Fourth Factor / The Factor Zoo
13.4 Liquidity and Asset Pricing 427
13.5 The Equity Premium Puzzle 429
Expected versus Realized Returns / Survivorship Bias /
Extensions to the CAPM May Mitigate the Equity Premium
Puzzle / Liquidity and the Equity Premium Puzzle /
Behavioral Explanations of the Equity Premium Puzzle
End of Chapter Material 435–438
PART IV
Fixed-Income Securities 439
Chapter 14
Bond Prices and Yields 439
14.1 Bond Characteristics 440
Treasury Bonds and Notes
Accrued Interest and Quoted Bond Prices
Corporate Bonds
Call Provisions on Corporate Bonds / Convertible
Bonds / Puttable Bonds / Floating-Rate Bonds
Preferred Stock / Other Domestic Issuers / International
Bonds / Innovation in the Bond Market
Maturity / Inverse Floaters / Asset-Backed Bonds /
Catastrophe Bonds / Indexed Bonds
14.2 Bond Pricing 446
Bond Pricing between Coupon Dates
14.3 Bond Yields 451
Yield to Maturity / Yield to Call / Realized Compound
Return versus Yield to Maturity
14.4 Bond Prices over Time 458
Yield to Maturity versus Holding-Period Return / Zero-
Coupon Bonds and Treasury Strips / After-Tax Returns
14.5 Default Risk and Bond Pricing 463
Junk Bonds / Determinants of Bond Safety / Bond
Indentures
Sinking Funds / Subordination of Further Debt /
Dividend
Restrictions / Collateral
Yield to Maturity and Default Risk / Credit Default
Swaps / Credit Risk and Collateralized Debt
Obligations
End of Chapter Material 474–480
Chapter 15
The Term Structure of Interest Rates 481
15.1 The Yield Curve 481
Bond Pricing
15.2 The Yield Curve and Future Interest Rates 484
The Yield Curve under Certainty / Holding-Period
Returns / Forward Rates
15.3 Interest Rate Uncertainty and Forward Rates 489
15.4 Theories of the Term Structure 491
The Expectations Hypothesis / Liquidity Preference
Theory / Market Segmentation
15.5 Interpreting the Term Structure 495
15.6 Forward Rates as Forward Contracts 498
End of Chapter Material 500–508
Chapter 16
Managing Bond Portfolios 509
16.1 Interest Rate Risk 510
Interest Rate Sensitivity / Duration / What Determines
Duration?
Rule 1 for Duration / Rule 2 for Duration / Rule 3 for
Duration / Rule 4 for Duration / Rule 5 for Duration
16.2 Convexity 519
Why Do Investors Like Convexity? / Duration and
Convexity of Callable Bonds / Duration and Convexity of
Mortgage-Backed Securities
16.3 Passive Bond Management 527
Bond-Index Funds / Immunization / Cash Flow Matching
and Dedication / Other Problems with Conventional
Immunization
16.4 Active Bond Management 536
Sources of Potential Profit / Horizon Analysis
End of Chapter Material 539–550
PART V
Security Analysis 551
Chapter 17
Macroeconomic and Industry Analysis 551
17.1 The Global Economy 551
17.2 The Domestic Macroeconomy 554
Key Economic Indicators
Gross Domestic Product / Employment / Inflation /
Interest Rates / Budget Deficit / Sentiment
17.3 Demand and Supply Shocks 556
17.4 Federal Government Policy 557
Fiscal Policy / Monetary Policy / Supply-Side Policies
17.5 Business Cycles 560
The Business Cycle / Economic Indicators
17.6 Industry Analysis 564
Defining an Industry / Sensitivity to the Business Cycle /
Sector Rotation / Industry Life Cycles
Start-Up Stage / Consolidation Stage / Maturity Stage /
Relative Decline
Industry Structure and Performance
Threat of Entry / Rivalry between Existing Competitors /
Pressure from Substitute Products / Bargaining Power
of Buyers / Bargaining Power of Suppliers
End of Chapter Material 574–582
Chapter 18
Equity Valuation Models 583
18.1 Valuation by Comparables 583
Limitations of Book Value
18.2 Intrinsic Value versus Market Price 585
18.3 Dividend Discount Models 587
The Constant-Growth DDM / Convergence of Price
to Intrinsic Value / Stock Prices and Investment
The Options Clearing Corporation / Other
Listed Options
Index Options / Futures Options / Foreign Currency
Options / Interest Rate Options
20.2 Values of Options at Expiration 679
Call Options / Put Options / Option versus Stock
Investments
20.3 Option Strategies 683
Protective Put / Covered Calls / Straddle / Spreads /
Collars
20.4 The Put-Call Parity Relationship 691
20.5 Option-like Securities 694
Callable Bonds / Convertible Securities /
Warrants / Collateralized Loans / Levered Equity
and Risky Debt
20.6 Financial Engineering 700
20.7 Exotic Options 702
Asian Options / Barrier Options / Lookback
Options / Currency-Translated Options / Digital
Options
End of Chapter Material 703–714
Chapter 21
Option Valuation 715
21.1 Option Valuation: Introduction 715
Intrinsic and Time Values / Determinants of Option
Values
21.2 Restrictions on Option Values 719
Restrictions on the Value of a Call Option /
Early Exercise and Dividends / Early Exercise of
American Puts
21.3 Binomial Option Pricing 722
Two-State Option Pricing / Generalizing the
Two-State Approach / Making the Valuation Model
Practical
21.4 Black-Scholes Option Valuation 730
The Black-Scholes Formula / Implied Volatility /
Dividends and Call Option Valuation / Put
Option Valuation / Dividends and Put Option
Valuation
21.5 Using the Black-Scholes Formula 738
Hedge Ratios and the Black-Scholes Formula /
Portfolio Insurance / Option Pricing and the
Financial Crisis / Option Pricing and Portfolio
Theory / Hedging Bets on Mispriced
Options
21.6 Empirical Evidence on Option Pricing 750
End of Chapter Material 751–762
Chapter 22
Futures Markets 763
22.1 The Futures Contract 763
The Basics of Futures Contracts / Existing Contracts
22.2 Trading Mechanics 769
The Clearinghouse and Open Interest / The Margin Account
and Marking to Market / The Convergence Property / Cash
versus Actual Delivery / Regulations / Taxation
22.3 Futures Markets Strategies 773
Hedging and Speculation / Basis Risk and Hedging
22.4 Futures Prices 777
The Spot-Futures Parity Theorem / Spreads / Forward
versus Futures Pricing
22.5 Futures Prices versus Expected Spot Prices 784
Expectations Hypothesis / Normal Backwardation /
Contango / Modern Portfolio Theory
End of Chapter Material 786–790
Chapter 23
Futures, Swaps, and Risk Management 791
23.1 Foreign Exchange Futures 791
The Markets / Interest Rate Parity / Direct versus Indirect
Quotes / Using Futures to Manage Exchange Rate Risk
23.2 Stock-Index Futures 799
The Contracts / Creating Synthetic Stock Positions: An
Asset Allocation Tool / Index Arbitrage / Using Index
Futures to Hedge Market Risk
23.3 Interest Rate Futures 804
Hedging Interest Rate Risk
23.4 Swaps 806
Swaps and Balance Sheet Restructuring / The Swap
Dealer / Other Interest Rate Contracts / Swap Pricing /
Credit Risk in the Swap Market / Credit Default Swaps
23.5 Commodity Futures Pricing 813
Pricing with Storage Costs / Discounted Cash Flow
Analysis for Commodity Futures
End of Chapter Material 817–826
PART VII
Applied Portfolio
Management 827
Chapter 24
Portfolio Performance Evaluation 827
24.1 The Conventional Theory of Performance
Evaluation 827
Average Rates of Return / Time-Weighted Returns versus
Dollar-Weighted Returns / Adjusting Returns for Risk /
Risk-Adjusted Performance Measures / The Sharpe Ratio
for Overall Portfolios
The M2 Measure and the Sharpe Ratio
The Treynor Ratio / The Information Ratio / The Role
of Alpha in Performance Measures / Implementing
Performance Measurement: An Example / Realized
Returns versus Expected Returns / Selection Bias and
Portfolio Evaluation
24.2 Style Analysis 839
24.3 Performance Measurement with Changing Portfolio
Composition 841
Performance Manipulation and the Morningstar Risk-
Adjusted Rating
24.4 Market Timing 845
The Potential Value of Market Timing / Valuing Market
Timing as a Call Option / The Value of Imperfect
Forecasting
24.5 Performance Attribution Procedures 850
Asset Allocation Decisions / Sector and Security Selection
Decisions / Summing Up Component Contributions
End of Chapter Material 855–866
Chapter 25
International Diversification 867
25.1 Global Markets for Equities 867
Developed Countries / Emerging Markets / Market
Capitalization and GDP / Home-Country Bias
25.2 Exchange Rate Risk and International
Diversification 871
Exchange Rate Risk / Investment Risk in International
Markets / International Diversification / Are Benefits
from International Diversification Preserved in
Bear Markets?
25.3 Political Risk 882
25.4 International Investing and Performance
Attribution 885
Constructing a Benchmark Portfolio of Foreign Assets /
Performance Attribution
End of Chapter Material 889–894
Chapter 26
Alternative Assets 895
26.1 Alternative Assets 896
The Alternative Asset Universe
Hedge Funds / Private Equity / Real Assets / Structured
Products
Alternative Assets versus Traditional Assets
Transparency / Investors / Investment Strategies /
Liquidity / Investment Horizon / Fee Structure
Role of Alternative Assets in Diversified Portfolios /
Growth of Alternative Assets
26.2 Hedge Funds 900
Hedge Fund Strategies / Statistical Arbitrage / High-
Frequency Strategies /
Electronic News Feeds / Cross-Market Arbitrage /
Electronic Market Making / Electronic “Front Running”
Portable Alpha
26.3 Venture Capital and Angel Investors 905
Angel Investors / Venture Capital / Venture Capital and
Investment Stages / Fund Life Cycle / Private Equity
Valuation / Venture Syndication / Venture Capital and
Innovation
26.4 Leveraged Buyout Funds 913
Leveraged Buyout Firm Structure / The Deal / Exits /
Leveraged Buyouts and Innovation
26.5 Performance Measurement for Alternative
Investment Funds 916
Liquidity and Performance
Liquidity and Hedge Fund Performance / Liquidity and
Private Equity
Survivorship Bias and Backfill Bias / Tail Events /
Historical Hedge Fund Performance / Style Analysis /
Historical Performance of Private Equity
Grandstanding / Industry Specialization
Efficient Frontier
26.6 Fee Structure in Alternative Investments 926
Incentive Fees / Private Equity Chasing Waterfalls /
Funds of Funds
End of Chapter Material 928–934
Chapter 27
The Theory of Active Portfolio
Management 935
27.1 Optimal Portfolios and Alpha Values 935
Forecasts of Alpha Values and Extreme Portfolio Weights /
Restriction of Tracking Risk
27.2 The Treynor-Black Model and Forecast
Precision 942
Adjusting Forecasts for the Precision of Alpha /
Distribution of Alpha Values / Organizational Structure
and Performance
27.3 The Black-Litterman Model 946
Black-Litterman Asset Allocation Decision / Step 1: The
Covariance Matrix from Historical Data / Step 2:
Determination of a Baseline Forecast / Step 3:
Integrating the Manager’s Private Views / Step 4:
Revised (Posterior) Expectations / Step 5: Portfolio
Optimization
27.4 Treynor-Black versus Black-Litterman: Complements,
Not Substitutes 951
The BL Model as Icing on the TB Cake / Why Not
Replace the Entire TB Cake with the BL Icing?
27.5 The Value of Active Management 953
A Model for the Estimation of Potential Fees /
Results from the Distribution of Actual Information
Ratios / Results from Distribution of Actual Forecasts
27.6 Concluding Remarks on Active Management 955
End of Chapter Material 955–956
Appendix A: Forecasts and Realizations of Alpha 956
Appendix B: The General Black-Litterman Model 957
Chapter 28
Investment Policy and the Framework of the
CFA Institute 959
28.1 The Investment Management Process 960
28.2 Investor Objectives 962
Individual Investors
Personal Trusts / Mutual Funds / Pension Funds /
Endowment Funds / Life Insurance Companies /
Non–Life Insurance Companies / Banks
28.3 Investor Constraints 966
Liquidity / Investment Horizon / Regulations / Tax
Considerations / Unique Needs
28.4 Policy Statements 969
Sample Policy Statements for Individual Investors
28.5 Asset Allocation 973
Top-Down Asset Allocation for Institutional Investors /
Monitoring and Revising the Portfolio
28.6 Managing Portfolios of Individual Investors 975
Investment in Residence / Saving for Retirement and
the Assumption of Risk / Retirement Planning Models /
Target Date Funds / Tax Sheltering and Asset Allocation
The Tax-Deferral Option / Tax-Protected Retirement
Plans / Deferred Annuities / Variable and Universal
Life Insurance
28.7 Pension Funds 981
Defined Contribution Plans / Defined Benefit Plans /
Pension Investment Strategies
Investing in Equities
End of Chapter Material 984–994
REFERENCES TO CFA PROBLEMS 995
GLOSSARY G-1
NAME INDEX I
SUBJECT INDEX I-4
NOTATION, FORMULAS F-1