Students learn how to identify, calculate, and assess individual investments and investment portfolios, identify types of investment risks, calculate risk, and analyze the results. Students also learn how to calculate the future and present values of individual cash flows, ordinary annuities, annuities due, perpetuities, and investments with uneven cash flows. Course activities also cover calculating interest rates and maturity dates, establishing an amortization table, and calculating payments on amortized loans. Students also learn about the bond and stock markets, identifying characteristics of various types of stocks and bonds and their risks, and how to evaluate and invest in stocks and bonds. The manual is designed for quick scanning in the classroom and filled with interactive exercises that help ensure student success.
Table of Contents Unit 1: Stand-alone risk
Topic A: Risk basics
Topic B: Probability analysis and rate of return
Topic C: Risk calculation Unit 2: Portfolio risk
Topic A: Diversification principle
Topic B: The Capital Asset Pricing Model
Topic C: Ratio analysis Unit 3: Future and present value of money
Topic A: Time value of money
Topic B: Compounding and discounting Unit 4: Even and uneven cash flows
Topic A: Annuities
Topic B: Calculating financial values Unit 5: Bonds and stocks
Topic A: Bond fundamentals
Topic B: Stock fundamentals
Topic C: Valuation of bonds and stocks Objectives Use the diversification principle to invest in portfolios; use the Capital Asset Pricing Model; and calculate different types of financial ratios. Identify different bond types and describe their characteristics; identify different types of stocks. Calculate the time value of money; and use compounding and discounting methods to calculate the future and present value of money. Identify the types of annuities and calculate their present and future values; identify the types of interest rates; analyze uneven cash flows; and prepare a scheduling table for amortized loans. Identify different bond types and describe their characteristics; identify different types of stocks; describe the characteristics of the stock market; evaluate bonds and stocks; and identify the terms involved in their valuation.
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