Portfolio Construction, Management And Protection

by Strong,Robert A.

• ISBN13: 9780324232585
• ISBN10: 0324232586
• Edition: 4th
• Format: Hardcover
• Copyright: 2005-07-14
• Publisher: Cengage Learning

Summary

This applications-oriented text transitions from theory to practice in a clear, straightforward manner. An ideal text for schools that do not have a "pure" portfolio course, it accomplishes the objectives of both a traditional investments course and a portfolio theory course. The book balances coverage of both the small and large investor, and offers unique coverage of topics not found in other texts, such as fiduciary duty and investment policy. Numerous references and questions from the CFA exam are also included.

Table of Contents

Preface	xxi
PART ONE BACKGROUND, BASIC PRINCIPLES, AND INVESTMENT POLICY	1	(124)
The Process of Portfolio Management	3	(12)
Introduction	3	(1)
Part One: Background, Basic Principles, and Investment Policy	4	(4)
Part Two: Portfolio Construction	8	(1)
Part Three: Portfolio Management	9	(2)
Part Four: Portfolio Protection and Contemporary Issues	11	(1)
Internet Exercise	12	(3)
Valuation, Risk, Return, and Uncertainty	15	(37)
Key Terms	15	(1)
Introduction	15	(1)
Valuation	16	(1)
Growing Income Streams	16	(1)
Safe Dollars and Risky Dollars	17	(6)
Choosing Among Risky Alternatives	18	(3)
Defining Risk	21	(2)
Relationship Between Risk and Return	23	(5)
Direct Relationship	23	(1)
Concept of Utility	23	(1)
Diminishing Marginal Utility of Money	24	(1)
St. Petersburg Paradox	24	(2)
Fair Bets	26	(1)
The Consumption Decision	26	(1)
Other Considerations	27	(1)
The Concept of Return	28	(6)
Measurable Return	28	(3)
Return on Investment	31	(3)
Some Statistical Facts of Life	34	(11)
Definitions	34	(4)
Properties of Random Variables	38	(4)
Linear Regression	42	(1)
R Squared and Standard Errors	43	(2)
Summary	45	(1)
Questions	46	(1)
Problems	47	(3)
Internet Exercises	50	(1)
Further Reading	50	(2)
Setting Portfolio Objectives	52	(29)
Key Terms	52	(1)
Introduction	52	(1)
Why Setting Objectives Can Be Difficult	53	(2)
Semantics	53	(1)
Indecision	54	(1)
Subjectivity	54	(1)
Multiple Beneficiaries	55	(1)
Investment Policy versus Investment Strategy	55	(1)
Portfolio Objectives	55	(7)
Preconditions	55	(2)
Traditional Portfolio Objectives	57	(2)
Special Situation of Tax-Free Income	59	(2)
Portfolio Objectives and Expected Utility	61	(1)
The Importance of Primary and Secondary Objectives	62	(1)
Other Factors to Consider in Establishing Objectives	63	(3)
Inconsistent Objectives	63	(1)
Infrequent Objectives	64	(1)
Portfolio Splitting	64	(1)
Liquidity	65	(1)
The Role of Cash	65	(1)
Portfolio Dedication	66	(2)
Cash Matching	66	(1)
Duration Matching	66	(2)
Summary	68	(1)
Questions	69	(1)
Problems	70	(2)
Internet Exercises	72	(1)
Further Reading	73	(1)
Appendix Mutual Fund Evaluation Term Project	74	(1)
Key Terms	74	(1)
Introduction	74	(1)
Classification of Mutual Funds	74	(4)
Open End versus Closed End	74	(1)
Net Asset Value versus Market Value	75	(1)
Load versus No Load	75	(2)
Management Fees	77	(1)
Buying Mutual Fund Shares	77	(1)
Mutual Fund Objectives	77	(1)
Term Assignment	78	(2)
Part One	78	(1)
Part Two	79	(1)
Part Three	79	(1)
Part Four	79	(1)
Part Five	80	(1)
Further Reading	80	(1)
Investment Policy	81	(44)
Key Terms	81	(1)
Introduction	81	(1)
The Purpose of Investment Policy	82	(7)
Outline Expectations and Responsibilities	82	(2)
Identify Objectives and Constraints	84	(4)
Outline Eligible Asset Classes and Their Permissible Uses	88	(1)
Provide a Mechanism for Evaluation	88	(1)
Elements of a Useful Investment Policy	89	(5)
Return	89	(1)
Risk	90	(2)
Constraints	92	(2)
Risk and Return Considerations: Different Investors	94	(4)
Individual Investors	94	(1)
Institutional Investors	94	(4)
Critiquing and Revising the Investment Policy Statement	98	(2)
Characteristics of a Good Statement	98	(1)
Revising the Policy	98	(2)
Summary	100	(1)
Questions	100	(1)
Problems	101	(7)
Internet Exercise	108	(1)
Further Reading	109	(1)
Appendix Sample Statements of Investment Policy	110	(1)
All Souls Congregational Church	110	(2)
All Souls Congregational Church Endowment Fund Investment Policy March 2003	110	(1)
General Purpose and Philosophy	110	(1)
Responsibilities	111	(1)
Objectives	111	(1)
Constraints	111	(1)
Reporting	112	(1)
The Philadelphia Foundation	112	(3)
The Philadelphia Foundation, Inc. Investment Policy Approved---November 2003	112	(1)
Mission	112	(1)
Investment Goals	112	(1)
Spending Policy	113	(1)
Asset Allocation Strategy	113	(1)
Investment Guidelines	113	(1)
Administrative and Review Procedures	114	(1)
Investment Responsibility	114	(1)
Eastern Maine Healthcare	115	(10)
Statement of Investment Objectives and Policy Guidelines for Eastern Maine Healthcare	115	(1)
Pension Plan Endowment Fund Self Insurance Trust April 1998	115	(1)
Amended by Eastern Maine Healthcare Board of Directors December 17, 2002	115	(1)
Purpose	115	(1)
Endowment Fund Spending Policy	115	(1)
Objectives	116	(1)
Asset Allocation/Manager Structure	117	(1)
Investment Guidelines	118	(3)
Performance Standards	121	(1)
Responsibilities	122	(2)
Amendments	124	(1)
PART TWO PORTFOLIO CONSTRUCTION	125	(260)
The Mathematics of Diversification	127	(15)
Key Terms	127	(1)
Introduction	127	(1)
Linear Combinations	128	(6)
Return	128	(1)
Variance	128	(6)
Single-Index Model	134	(3)
Computational Advantages	134	(2)
Portfolio Statistics with the Single-Index Model	136	(1)
Multi-Index Model	137	(1)
Summary	137	(1)
Questions	138	(1)
Problems	138	(3)
Internet Exercise	141	(1)
Further Reading	141	(1)
Why Diversification Is a Good Idea	142	(50)
Key Terms	142	(1)
Introduction	142	(1)
Carrying Your Eggs in More Than One Basket	142	(2)
Investments in Your Own Ego	143	(1)
The Concept of Risk Aversion Revisited	143	(1)
Multiple Investment Objectives	144	(1)
Role of Uncorrelated Securities	144	(12)
Variance of a Linear Combination: The Practical Meaning	144	(1)
Portfolio Programming in a Nutshell	145	(1)
Concept of Dominance	146	(3)
Harry Markowitz: The Founder of Portfolio Theory	149	(7)
Lessons from Evans and Archer	156	(4)
Methodology	156	(1)
Results	157	(1)
Implications	158	(1)
Words of Caution	159	(1)
Diversification and Beta	160	(1)
Capital Asset Pricing Model	161	(3)
Systematic and Unsystematic Risk	161	(1)
Fundamental Risk/Return Relationship Revisited	161	(3)
Equity Risk Premium	164	(1)
Using a Scatter Diagram to Measure Beta	165	(3)
Correlation of Returns	165	(1)
Linear Regression and Beta	166	(2)
Importance of Logarithms	168	(2)
Statistical Significance	168	(2)
Arbitrage Pricing Theory	170	(3)
APT Background	170	(1)
The APT Model	170	(2)
Example of the APT	172	(1)
Comparison of the CAPM and the APT	172	(1)
Future Prospects for APT	173	(1)
Summary	173	(1)
Questions	174	(1)
Problems	175	(2)
Internet Exercises	177	(1)
Further Reading	178	(2)
Appendix Stochastic Dominance	180	(1)
Key Terms	180	(1)
Introduction	180	(1)
Efficiency Revisited	181	(1)
First-Degree Stochastic Dominance	181	(4)
Second-Degree Stochastic Dominance	185	(2)
Stochastic Dominance and Utility	187	(3)
Stochastic Dominance and Mean Return	189	(1)
Higher Orders of Stochastic Dominance	189	(1)
Practical Problems with Stochastic Dominance	190	(1)
Summary	190	(1)
Problems	190	(1)
Further Reading	191	(1)
International Investment and Diversification	192	(42)
Key Terms	192	(1)
Introduction	192	(1)
Why International Diversification Makes Theoretical Sense	193	(4)
Remembering Evans and Archer	193	(1)
Remembering Capital Market Theory	194	(3)
Foreign Exchange Risk	197	(13)
Business Example	197	(1)
An Investment Example	198	(1)
From Whence Cometh the Risk?	198	(5)
Dealing with the Risk	203	(5)
The Eurobond Market	208	(1)
Combining the Currency and Market Decisions	208	(2)
Key Issues in Foreign Exchange Risk Management	210	(1)
Investments in Emerging Markets	210	(10)
Background	211	(1)
Adding Value	211	(1)
Reducing Risk	212	(1)
Following the Crowd	212	(1)
Special Risks	213	(4)
Asymmetric Correlations	217	(1)
Market Microstructure Considerations	218	(2)
Political Risk	220	(3)
Factors Contributing to Political Risk	221	(1)
Subclasses of Political Risk	222	(1)
Dealing with Political Risk	222	(1)
Other Topics Related to International Diversification	223	(2)
Multinational Corporations	223	(1)
American Depository Receipts	223	(1)
International Mutual Funds	224	(1)
Summary	225	(1)
Questions	226	(1)
Problems	227	(4)
Internet Exercises	231	(1)
Further Reading	231	(3)
The Capital Markets and Market Efficiency	234	(26)
Key Terms	234	(1)
Introduction	234	(1)
Role of the Capital Markets	234	(3)
Economic Function	235	(1)
Continuous Pricing Function	235	(1)
Fair Price Function	236	(1)
Efficient Market Hypothesis	237	(10)
Types of Efficiency	237	(1)
Weak Form	238	(4)
Semi-Strong Form	242	(1)
Strong Form	243	(1)
Semi-Efficient Market Hypothesis	244	(3)
Security Prices and Random Walks	247	(1)
Anomalies	247	(7)
Low PE Effect	247	(1)
Low-Priced Stocks	248	(1)
Small Firm and Neglected Firm Effects	249	(1)
Market Overreaction	250	(1)
January Effect	250	(2)
Day-of-the-Week Effect	252	(1)
Turn-of-the-Calendar Effect	252	(1)
Persistence of Technical Analysis	252	(1)
Chaos Theory	253	(1)
Summary	254	(1)
Questions	255	(1)
Problems	256	(1)
Internet Exercise	257	(1)
Further Reading	257	(3)
Picking the Equity Players	260	(28)
Key Terms	260	(1)
Introduction	260	(1)
Stock Selection Philosophy: Fundamental and Technical Analysis	261	(1)
Dividends and Why They Really Do Not Matter	261	(13)
Types of Dividends	261	(6)
Why Dividends Do Not Matter	267	(1)
Theory versus Practice	268	(1)
Stock Splits versus Stock Dividends	269	(5)
Investment Styles	274	(6)
Value Investing	274	(3)
Growth Investing	277	(1)
Capitalization	277	(2)
Integrating Style and Size	279	(1)
Categories of Stock	280	(5)
Blue Chip Stock	280	(1)
Income Stocks	281	(1)
Cyclical Stocks	281	(1)
Defensive Stocks	282	(1)
Growth Stocks	282	(1)
Speculative Stocks	283	(1)
Penny Stocks	283	(1)
Categories Are Not Mutually Exclusive	283	(1)
A Note on Stock Symbols	284	(1)
Summary	285	(1)
Questions	285	(1)
Problems	286	(1)
Internet Exercise	287	(1)
Further Reading	287	(1)
Security Screening	288	(27)
Key Terms	288	(1)
Introduction	288	(1)
Why Screening Is Necessary	289	(1)
Time Constraints	289	(1)
Everyday Examples of Screens	289	(1)
What Constitutes a Good Screen?	290	(1)
Ease of Administration	290	(1)
Relevance and Appropriateness	290	(1)
Acceptance by the User	291	(1)
Ordinal Ranking of Screening Criteria	291	(1)
Sources of Information	291	(7)
Value Line	291	(1)
Standard & Poor's	292	(1)
Mergent	292	(6)
Brokerage Information	298	(1)
Internet	298	(1)
Screening Processes	298	(8)
Multiple-Stage Screening	298	(1)
Subjective Screening	299	(3)
Screening with the Popular Press Only	302	(4)
A Quick Risk Assessment Screen with the Stock Report	306	(1)
Examples of Commercial Screens	306	(5)
Published Paper Data	306	(1)
Computerized Data	307	(4)
Summary	311	(1)
Questions	312	(1)
Problems	312	(1)
Internet Exercise	313	(1)
Further Reading	313	(2)
Bond Pricing and Selection	315	(46)
Key Terms	315	(1)
Introduction	315	(1)
Review of Bond Principles	316	(4)
Identification of Bonds	316	(1)
Classification of Bonds	316	(2)
Terms of Repayment	318	(1)
Bond Cash Flows	319	(1)
Convertible Bonds	319	(1)
Registration	320	(1)
Bond Pricing and Returns	320	(12)
Valuation Equations	321	(1)
Yield to Maturity	322	(1)
Realized Compound Yield	323	(1)
Current Yield	324	(1)
Term Structure of Interest Rates	325	(2)
Spot Rates	327	(2)
The Conversion Feature	329	(1)
The Matter of Accrued Interest	330	(2)
Bond Risk	332	(7)
Price Risks	332	(1)
Convenience Risks	333	(2)
Malkiel's Interest Rate Theorems	335	(2)
Duration as a Measure of Interest Rate Risk	337	(2)
The Meaning of Bond Diversification	339	(2)
Default Risk	339	(1)
Dealing with the Yield Curve	340	(1)
Bond Betas	341	(1)
Choosing Bonds	341	(4)
Client Psychology and Bonds Selling at a Premium	341	(1)
Call Risk	342	(1)
Constraints	342	(3)
Example: Monthly Retirement Income	345	(8)
The Problem	345	(1)
Unspecified Constraints	346	(1)
Using S&P's Bond Guide	346	(1)
Solving the Problem	347	(6)
Summary	353	(1)
Questions	354	(1)
Problems	355	(3)
Internet Exercise	358	(1)
Further Reading	358	(3)
The Role of Real Assets	361	(24)
Key Terms	361	(1)
Introduction	361	(1)
Real Estate in General	362	(3)
Investment Characteristics	362	(1)
Developed and Undeveloped Property	363	(1)
Pension Fund Investment in Real Estate	364	(1)
Timberland in Particular	365	(9)
Institutional Interest in Timberland	365	(1)
A Timberland Investment Primer	366	(8)
Real Estate Investment Trusts	374	(1)
Types of REITs	374	(1)
Types of Real Estate Value	374	(2)
Gold	376	(6)
Motivation for Gold Investment	376	(1)
Determinants of the Price of Gold	377	(2)
The London Fix	379	(1)
Investing in Gold	380	(2)
Summary	382	(1)
Questions	382	(1)
Internet Exercise	383	(1)
Further Reading	383	(2)
PART THREE PORTFOLIO MANAGEMENT	385	(146)
Revision of the Equity Portfolio	387	(28)
Key Terms	387	(1)
Introduction	387	(1)
Active Management versus Passive Management	387	(10)
The Manager's Choices	388	(9)
Tactical Asset Allocation	397	(9)
What Is Tactical Asset Allocation?	397	(2)
How TAA Can Benefit a Portfolio	399	(1)
Designing a TAA Program	400	(1)
Caveats Regarding TAA Performance	400	(1)
Costs of Revision	401	(5)
Contributions to the Portfolio	406	(1)
When Do You Sell Stock?	406	(4)
Rebalancing	406	(1)
Upgrading	407	(1)
Sale of Stock via Stop Orders	407	(1)
Extraordinary Events	408	(1)
Final Thoughts	409	(1)
Summary	410	(1)
Questions	410	(1)
Problems	411	(2)
Internet Exercise	413	(1)
Further Reading	413	(2)
Revision of the Fixed-Income Portfolio	415	(20)
Key Terms	415	(1)
Introduction	415	(1)
Passive versus Active Management Strategies	416	(8)
Passive Strategies	416	(1)
Active Strategies	416	(4)
Risk of Barbells and Ladders	420	(2)
Bullets versus Barbells	422	(1)
Swaps	422	(1)
Forecasting Interest Rates	423	(1)
Volunteering Callable Municipal Bonds	424	(1)
Bond Convexity (Advanced Topic)	424	(7)
The Importance of Convexity	424	(1)
Calculating Convexity	425	(3)
An Example	428	(1)
Using Convexity	429	(2)
Summary	431	(1)
Questions	432	(1)
Problems	432	(1)
Internet Exercise	433	(1)
Further Reading	433	(2)
Principles of Options and Option Pricing	435	(24)
Key Terms	435	(1)
Introduction	435	(1)
Option Principles	436	(1)
Why Options Are a Good Idea	436	(1)
What Options Are	436	(1)
Standardized Option Characteristics	437	(1)
Where Options Come From	438	(1)
Where and How Options Trade	439	(1)
The Option Premium	440	(2)
Sources of Profits and Losses with Options	442	(1)
Option Pricing	443	(12)
Determinants of the Option Premium	443	(3)
Black-Scholes Option Pricing Model	446	(2)
Development and Assumptions of the Model	448	(2)
Insights into the Black-Scholes Model	450	(1)
Delta	451	(1)
Theory of Put/Call Parity	452	(2)
Stock Index Options	454	(1)
Summary	455	(1)
Questions	455	(1)
Problems	456	(1)
Internet Exercise	457	(1)
Further Reading	457	(2)
Option Overwriting	459	(24)
Key Terms	459	(1)
Introduction	459	(1)
Using Options to Generate Income	459	(16)
Writing Calls to Generate Income	460	(3)
Writing Puts to Generate Income	463	(4)
Writing Index Options	467	(5)
A Comparative Example	472	(3)
Combined Hedging/Income Generation Strategies	475	(3)
Writing Calls to Improve on the Market	475	(2)
Writing Puts to Acquire Stock	477	(1)
Writing Covered Calls for Downside Protection	478	(1)
Multiple Portfolio Managers	478	(2)
Separate Responsibilities	478	(1)
Distinction Between Option Overwriting and Portfolio Splitting	479	(1)
Integrating Options and Equity Management	479	(1)
Summary	480	(1)
Questions	480	(1)
Problems	481	(1)
Internet Exercise	482	(1)
Further Reading	482	(1)
Performance Evaluation	483	(28)
Key Terms	483	(1)
Introduction	483	(1)
Importance of Measuring Portfolio Risk	483	(4)
A Lesson from History: The 1968 Bank Administration Institute Report	484	(1)
A Lesson from a Few Mutual Funds	485	(1)
Why the Arithmetic Mean Is Often Misleading: A Review	486	(1)
Why Dollars Are More Important Than Percentages	487	(1)
Traditional Performance Measures	487	(7)
Sharpe and Treynor Measures	487	(4)
Jensen Measure	491	(1)
Performance Measurement in Practice	492	(2)
Dollar-Weighted and Time-Weighted Rates of Return	494	(1)
Performance Evaluation with Cash Deposits and Withdrawals	495	(5)
Daily Valuation Method	496	(2)
Modified Bank Administration Institute (BAI) Method	498	(1)
An Example	498	(1)
An Approximate Method	499	(1)
Performance Evaluation When Options Are Used	500	(6)
Incremental Risk-Adjusted Return from Options	500	(5)
Residual Option Spread	505	(1)
Final Comments on Performance Evaluation with Options	506	(1)
Summary	506	(1)
Questions	506	(1)
Problems	507	(1)
Internet Exercise	508	(1)
Further Reading	508	(3)
Fiduciary Duties and Responsibilities	511	(20)
Key Terms	511	(1)
Introduction	511	(1)
History	512	(4)
Prudent Man Rule	512	(2)
The Spitzer Case	514	(1)
Prudent Expert Standard	515	(1)
Uniform Management of Institutional Funds Act	515	(1)
Uniform Prudent Investor Act	515	(1)
Fiduciary Duties	516	(3)
Care	516	(2)
Loyalty	518	(1)
Prohibited Transactions	519	(1)
Emerging Areas	519	(9)
Due Diligence	519	(1)
Social Investing	520	(1)
Proxy Voting	521	(4)
Soft Dollars	525	(3)
Summary	528	(1)
Questions	528	(2)
Internet Exercise	530	(1)
Further Reading	530	(1)
PART FOUR PORTFOLIO PROTECTION AND EMERGING TOPICS	531	(108)
Principles of the Futures Market	533	(23)
Key Terms	533	(1)
Introduction	533	(1)
Futures Contracts	534	(3)
What Futures Contracts Are	534	(1)
Why We Have Futures Contracts	535	(1)
How to Fulfill the Futures Contract Promise	535	(2)
Market Mechanics	537	(5)
The Marketplace	537	(2)
Creation of a Contract	539	(1)
Market Participants	539	(3)
The Clearing Process	542	(4)
Matching Trades	543	(1)
Accounting Supervision	544	(1)
Intramarket Settlement	545	(1)
Settlement Prices	545	(1)
Delivery	546	(1)
Principles of Futures Contract Pricing	546	(4)
Expectations Hypothesis	547	(1)
Normal Backwardation	548	(1)
Full Carrying Charge Market	549	(1)
Reconciling the Three Theories	550	(1)
Foreign Currency Futures	550	(2)
Hedging and Speculating with Foreign Currency Futures	550	(1)
Pricing of Foreign Exchange Futures Contracts	551	(1)
Summary	552	(1)
Questions	553	(1)
Problems	554	(1)
Internet Exercise	554	(1)
Further Reading	554	(2)
Benching the Equity Players	556	(19)
Key Terms	556	(1)
Introduction	556	(1)
Using Options	556	(6)
Equity Options with a Single Security	557	(3)
Index Options	560	(2)
Using Futures Contracts	562	(6)
Importance of Financial Futures	562	(1)
Stock Index Futures Contracts	562	(1)
S&P 500 Stock Index Futures Contract	563	(1)
Hedging with Stock Index Futures	563	(2)
Calculating a Hedge Ratio	565	(1)
Hedging in Retrospect	566	(2)
Dynamic Hedging	568	(3)
Dynamic Hedging Example	569	(1)
The Dynamic Part of the Hedge	569	(1)
Dynamic Hedging with Futures Contracts	569	(2)
Summary	571	(1)
Questions	572	(1)
Problems	572	(1)
Internet Exercise	573	(1)
Further Reading	573	(2)
Removing Interest Rate Risk	575	(21)
Key Terms	575	(1)
Introduction	575	(1)
Interest Rate Futures Contracts	576	(6)
Categories of Interest Rate Futures Contracts	576	(1)
U.S. Treasury Bills and Their Futures Contracts	576	(3)
Treasury Bonds and Their Futures Contracts	579	(3)
Concept of Immunization	582	(10)
Duration Matching	582	(4)
Immunizing with Interest Rate Futures	586	(2)
Immunizing with Interest Rate Swaps	588	(2)
Disadvantages of Immunizing	590	(2)
Summary	592	(1)
Questions	592	(1)
Problems	593	(1)
Internet Exercise	594	(1)
Further Reading	594	(2)
Integrating Derivative Assets and Portfolio Management	596	(21)
Key Terms	596	(1)
Introduction	596	(1)
Setting the Stage	596	(5)
Portfolio Objectives	596	(1)
Portfolio Construction	597	(4)
Meeting an Income Constraint	601	(2)
Determining Unmet Income Needs	601	(1)
Writing Index Calls	601	(2)
Risk Management	603	(9)
Stock Portfolio	603	(3)
Hedging Company Risk	606	(1)
Fixed-Income Portfolio	607	(5)
Managing Cash Drag	612	(1)
Summary	613	(1)
Questions	614	(1)
Problems	614	(2)
Internet Exercise	616	(1)
Further Reading	616	(1)
Contemporary Issues in Portfolio Management	617	(22)
Key Terms	617	(1)
Introduction	617	(1)
Security Analyst Objectivity	618	(1)
Stock Lending	618	(6)
Mechanics of a Short Sale	619	(2)
How a Stock Lending Transaction Works	621	(1)
Stock Lending's Lucrative Nature	622	(1)
Regulatory Concerns	623	(1)
Certificateless Trading	623	(1)
Program Trading	624	(3)
Alternative Investments	627	(2)
Long/Short Portfolios	627	(1)
Hedge Funds	628	(1)
Managed Futures	629	(1)
Role of Derivative Assets	629	(2)
Process of Education	629	(1)
Getting Board Approval	630	(1)
The Chartered Financial Analyst Program	631	(3)
History	631	(1)
The CFA Program Exams	631	(1)
CFA Program Themes	632	(2)
Regulation Fair Disclosure	634	(2)
The SEC Position	634	(1)
The Industry Position	635	(1)
AIMR Response	635	(1)
The Future of the Regulation	635	(1)
Summary	636	(1)
Questions	637	(1)
Problems	637	(1)
Internet Exercise	638	(1)
Further Reading	638	(1)
Glossary	639	(16)
Index	655