Sunil K. Parameswaran

Fundamentals of Financial Instruments

An Introduction to Stocks, Bonds, Foreign Exchange, and Derivatives

• Gebundenes Buch

Produktbeschreibung

In the newly revised Second Edition of Fundamentals of Financial Instruments: An Introduction to Stocks, Bonds, Foreign Exchange, and Derivatives, renowned finance trainer Sunil Parameswaran delivers a comprehensive introduction to the full range of financial products commonly offered in the financial markets.

Using clear, worked examples of everything from basic equity and debt securities to complex instruments--like derivatives and mortgage-backed securities - the author outlines the structure and dynamics of the free-market system and explores the environment in which financial instruments are traded. This one-of-a-kind book also includes:
_ New discussions on interest rate derivatives, bonds with embedded options, mutual funds, ETFs, pension plans, financial macroeconomics, orders and exchanges, and Excel functions for finance
_ Supplementary materials to enhance the reader's ability to apply the material contained within
_ A foundational exploration of interest rates and the time value of money

Fundamentals of Financial Instruments is the ideal resource for business school students at the undergraduate and graduate levels, as well as anyone studying financial management or the financial markets. It also belongs on the bookshelves of executive education students and finance professionals seeking a refresher on the fundamentals of their industry.

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Produktdetails

• Wiley Finance Editions
• Verlag: Wiley / Wiley & Sons
• Artikelnr. des Verlages: 1W119816610
• 2. Aufl.
• Seitenzahl: 560
• Erscheinungstermin: 22. März 2022
• Englisch
• Abmessung: 260mm x 183mm x 35mm
• Gewicht: 1212g
• ISBN-13: 9781119816614
• ISBN-10: 1119816610
• Artikelnr.: 62951136

Autorenporträt

SUNIL PARAMESWARAN, PhD, is Director and CEO of Tarheel Consultancy Services, a corporate training and management consulting firm. His professional expertise includes securities markets, financial derivatives, fixed income securities, and international finance. He obtained his doctorate from the Fuqua School of Business at Duke University in North Carolina, USA.

Inhaltsangabe

Preface xxiii

Preface to the First Edition xxiv

Acknowledgments xxv

About the Author xxvi

Chapter 1 An Introduction to Financial Institutions, Instruments, and Markets 1

The Role of an Economic System 1

A Command Economy 2

AMarket Economy 2

Classification of Economic Units 4

An Economy's Relationship with the ExternalWorld 6

The Balance of Trade 8

The Current Account Balance 8

Financial Assets 9

Money 10

Money as a Unit of Account or a Standard of Value 10

Money as a Medium of Exchange 11

Money as a Store of Value 11

Money Is Perfectly Liquid 11

Equity Shares 12

Debt Securities 12

Preferred Shares 14

Foreign Exchange 14

Derivatives 14

Forward and Futures Contracts 15

Options Contracts 16

Swaps 18

Mortgages and Mortgage-backed Securities 19

Hybrid Securities 19

Primary Markets and Secondary Markets 19

Exchanges and Over-the-Counter (OTC) Markets 21

Brokers and Dealers 22

The Need for Brokers and Dealers 23

Trading Positions 24

The Buy-side and the Sell-side 25

Investment Bankers 25

Direct and Indirect Markets 26

Mutual Funds 27

Money and Capital Markets 30

The Eurocurrency Market 31

The International Bond Market 32

Globalization of Equity Markets 34

Dual Listing 35

Fungibility 37

Arbitrage 37

Arbitrage with ADRs 38

GDRs 39

Risk 39

After the Trade - Clearing and Settlement 41

Dematerialization and the Role of a Depository 42

Custodial Services 43

Globalization - The New Mantra 43

Chapter 2 Mathematics of Finance 46

Interest Rates 46

The Real Rate of Interest 46

The Fisher Equation 48

Simple Interest & Compound Interest 49

Variables and Corresponding Symbols 50

Simple Interest 50

Compound Interest 51

Properties 53

Effective Versus Nominal Rates of Interest 55

A Symbolic Derivation 56

Principle of Equivalency 56

Continuous Compounding 57

Future Value 58

Present Value 59

The Mechanics of Present Value Calculation 59

Handling a Series of Cash Flows 60

The Internal Rate of Return 61

Evaluating an Investment 63

The Future Value Approach 63

The Present Value Approach 63

The Rate of Return Approach 63

Annuities: An Introduction 64

Present Value 64

Future Value 65

Annuity Due 66

Present Value 66

Future Value 67

Perpetuities 67

The Amortization Method 68

Amortization with a Balloon Payment 70

The Equal Principal Repayment Approach 71

Types of Interest Computation 71

The Simple Interest Approach 72

The Add-on Rate Approach 72

The Discount Technique 73

Loans with a Compensating Balance 73

Time Value of Money-related Functions in Excel 73

The Future Value (FV) Function in Excel 74

The Present Value Function in Excel 75

Computing the Present and Future Values of Annuities and Annuities Due in Excel 75

Amortization Schedules and Excel 76

Chapter 3 Equity Shares, Preferred Shares, and Stock Market Indices 78

Introduction 78

Par Value