Lecture 2: The Investment Environment

2.1 Introduction
2.2 Lecture Outline
2.2.1 Types of investments
2.2.2 The Investment Process
2.2.3 Sources of finance and market data
2.2.4 Investment management function
2.3 Lecture Objectives Reflection questions, activity, exercises/quizz
2.4 End of lecture activities (self –tests)
2.5 Summary
2.6 Suggestion for further reading
1.1. The Investment Environment

Investment environment can be defined as the existing investment vehicles in the

market available for investor and the places for transactions with these investment
vehicles. Thus further in this subchapter the main types of investment vehicles and the
types of financial markets will be presented and described.

1.1. Investment vehicles

Investment in financial assets differs from investment in physical assets in those
important aspects:

• Financial assets are divisible, whereas most physical assets are not. An asset is
divisible if investor can buy or sell small portion of it. In case of financial assets it
means, that investor, for example, can buy or sell a small fraction of the whole
company as investment object buying or selling a number of common stocks.
• Marketability (or Liquidity) is a characteristic of financial assets that is not shared
by physical assets, which usually have low liquidity. Marketability (or liquidity)
reflects the feasibility of converting of the asset into cash quickly and without
affecting its price significantly. Most of financial assets are easy to buy or to sell in
the financial markets.
• The planned holding period of financial assets can be much shorter than the
holding period of most physical assets. The holding period for investments is defined
as the time between signing a purchasing order for asset and selling the asset.
Investors acquiring physical asset usually plan to hold it for a long period, but
investing in financial assets, such as securities, even for some months or a year can
be reasonable. Holding period for investing in financial assets vary in very wide
interval and depends on the investor’s goals and investment strategy.
• Information about financial assets is often more abundant and less costly to obtain,
than information about physical assets. Information availability shows the real
possibility of the investors to receive the necessary information which could
influence their investment decisions and investment results. Since a big portion of
information important for investors in such financial assets as stocks, bonds is
publicly available, the impact of many disclosed factors having influence on value
of these securities can be included in the analysis and the decisions made by
investors.

Even if we analyze only financial investment there is a big variety of financial

investment vehicles. The on going processes of globalization and integration open wider
possibilities for the investors to invest into new investment vehicles which were
unavailable for them some time ago because of the weak domestic financial systems and
limited technologies for investment in global investment environment.
Financial innovations suggest for the investors the new choices of investment but
at the same time make the investment process and investment decisions more
complicated, because even if the investors have a wide range of alternatives to invest
they can’t forgot the key rule in investments: invest only in what you really understand.
Thus the investor must understand how investment vehicles differ from each other and
only then to pick those which best match his/her expectations.
The most important characteristics of investment vehicles on which bases the
overall variety of investment vehicles can be assorted are the return on investment and
the risk which is defined as the uncertainty about the actual return that will be earned on
an investment (determination and measurement of returns on investments and risks will
be examined in Chapter 2). Each type of investment vehicles could be characterized by
certain level of profitability and risk because of the specifics of these financial
instruments. Though all different types of investment vehicles can be compared using
characteristics of risk and return and the most risky as well as less risky investment
vehicles can be defined. However the risk and return on investment are close related and
only using both important characteristics we can really understand the differences in
investment vehicles.
The main types of financial investment vehicles are:
• Short term investment vehicles;
• Fixed-income securities
• Common stock;
• Speculative investment vehicles;
• Other investment tools.
Short - term investment vehicles are all those which have a maturity of one year
or less. Short term investment vehicles often are defined as money-market instruments,
because they are traded in the money market which presents the financial market for
short term (up to one year of maturity) marketable financial assets. The risk as well as
the return on investments of short-term investment vehicles usually is lower than for
other types of investments. The main short term investment vehicles are:
• Certificates of deposit;
• Treasury bills;
• Commercial paper;
• Bankers’ acceptances;
• Repurchase agreements.
Certificate of deposit is debt instrument issued by bank that indicates a specified
sum of money has been deposited at the issuing depository institution. Certificate of
deposit bears a maturity date and specified interest rate and can be issued in any
denomination. Most certificates of deposit cannot be traded and they incur penalties for
early withdrawal. For large money-market investors financial institutions allow their
large-denomination certificates of deposits to be traded as negotiable certificates of
deposits.
Treasury bills (also called T-bills) are securities representing financial
obligations of the government. Treasury bills have maturities of less than one year. They
have the unique feature of being issued at a discount from their nominal value and the
difference between nominal value and discount price is the only sum which is paid at
the maturity for these short term securities because the interest is not paid in cash, only
accrued. The other important feature of T-bills is that they are treated as risk-free
securities ignoring inflation and default of a government, which was rare in developed
countries, the T-bill will pay the fixed stated yield with certainty. But, of course, the
yield on T-bills changes over time influenced by changes in overall macroeconomic
situation. T-bills are issued on an auction basis. The issuer accepts competitive bids and
allocates bills to those offering the highest prices. Non-competitive bid is an offer to
purchase the bills at a price that equals the average of the
competitive bids. Bills can be traded before the maturity, while their market price is
subject to change with changes in the rate of interest. But because of the early maturity
dates of T-bills large interest changes are needed to move T-bills prices very far. Bills
are thus regarded as high liquid assets.
Commercial paper is a name for short-term unsecured promissory notes issued
by corporation. Commercial paper is a means of short-term borrowing by large
corporations. Large, well-established corporations have found that borrowing directly
from investors through commercial paper is cheaper than relying solely on bank loans.
Commercial paper is issued either directly from the firm to the investor or through an
intermediary. Commercial paper, like T-bills is issued at a discount. The most common
maturity range of commercial paper is 30 to 60 days or less. Commercial paper is riskier
than T-bills, because there is a larger risk that a corporation will default. Also,
commercial paper is not easily bought and sold after it is issued, because the issues are
relatively small compared with T-bills and hence their market is not liquid.

Banker‘s acceptances are the vehicles created to facilitate commercial trade

transactions. These vehicles are called bankers acceptances because a bank accepts the
responsibility to repay a loan to the holder of the vehicle in case the debtor fails to
perform. Banker‘s acceptances are short-term fixed-income securities that are created by
non-financial firm whose payment is guaranteed by a bank. This short-term loan contract
typically has a higher interest rate than similar short –term securities to compensate for
the default risk. Since bankers’ acceptances are not standardized, there is no active
trading of these securities.
Repurchase agreement (often referred to as a repo) is the sale of security with a
commitment by the seller to buy the security back from the purchaser at a specified price
at a designated future date. Basically, a repo is a collectivized short-term loan, where
collateral is a security. The collateral in a repo may be a Treasury security, other money-
market security. The difference between the purchase price and the sale price is the
interest cost of the loan, from which repo rate can be calculated. Because of concern
about default risk, the length of maturity of repo is usually very short. If the agreement
is for a loan of funds for one day, it is called overnight repo; if the term of the agreement
is for more than one day, it is called a term repo. A reverse repo is the opposite of a repo.
In this transaction a corporation buys the securities with an agreement to sell them at a
specified price and time. Using repos helps to increase the liquidity in the money market.

Our focus in this course further will be not investment in short-term vehicles but
it is useful for investor to know that short term investment vehicles provide the
possibility for temporary investing of money/ funds and investors use these instruments
managing their investment portfolio.
Fixed-income securities are those which return is fixed, up to some redemption
date or indefinitely. The fixed amounts may be stated in money terms or indexed to some
measure of the price level. This type of financial investments is presented by two
different groups of securities:
• Long-term debt securities
• Preferred stocks.
Long-term debt securities can be described as long-term debt instruments
representing the issuer’s contractual obligation. Long term securities have maturity
longer than 1 year. The buyer (investor) of these securities is landing money to the issuer,
who undertake obligation periodically to pay interest on this loan and repay the principal
at a stated maturity date. Long-term debt securities are traded in the capital markets.
From the investor’s point of view these securities can be treated as a “safe” asset. But in
reality the safety of investment in fixed –income securities is strongly related with the
default risk of an issuer. The major representatives of long-term debt securities are
bonds, but today there are a big variety of different kinds of bonds, which differ not only
by the different issuers (governments, municipals, companies, agencies, etc.), but by
different schemes of interest payments which is a result of bringing financial innovations
to the long-term debt securities market. As demand for borrowing the funds from the
capital markets is growing the long-term debt securities today are prevailing in the global
markets. And it is really become the challenge for investor to pick long-term debt
securities relevant to his/ her investment expectations, including the safety of
investment. We examine the different kinds of long-term debt securities and their
features important to understand for the investor in Chapter 5, together with the other
aspects in decision making investing in bonds.

Preferred stocks are equity security, which has infinitive life and pay dividends.
But preferred stock is attributed to the type of fixed-income securities, because the
dividend for preferred stock is fixed in amount and known in advance.

Though, this security provides for the investor the flow of income very similar to that of
the bond. The main difference between preferred stocks and bonds is that for preferred
stock the flows are for ever, if the stock is not callable. The preferred stockholders are
paid after the debt securities holders but before the common stock holders in terms of
priorities in payments of income and in case of liquidation of the company. If the issuer
fails to pay the dividend in any year, the unpaid dividends will have to be paid if the
issue is cumulative. If preferred stock is issued as noncumulative, dividends for the years
with losses do not have to be paid. Usually same rights to vote in general meetings for
preferred stockholders are suspended. Because of having the features attributed for both
equity and fixed-income securities preferred stocks is known as hybrid security. A most
preferred stock is issued as noncumulative and callable. In recent years the preferred
stocks with option of convertibility to common stock are proliferating.

The common stock is the other type of investment vehicles which is one of most
popular among investors with long-term horizon of their investments. Common stock
represents the ownership interest of corporations or the equity of the stock holders.
Holders of common stock are entitled to attend and vote at a general meeting of
shareholders, to receive declared dividends and to receive their share of the residual
assets, if any, if the corporation is bankrupt. The issuers of the common stock are the
companies which seek to receive funds in the market and though are “going public”. The
issuing common stocks and selling them in the market enables the company to raise
additional equity capital more easily when using other alternative sources. Thus many
companies are issuing their common stocks which are traded in financial markets and
investors have wide possibilities for choosing this type of securities for the investment.
The questions important for investors for investment in common stock decision making
will be discussed in Chapter 4.

Speculative investment vehicles following the term “speculation” (see p.8)

could be defined as investments with a high risk and high investment return. Using these
investment vehicles speculators try to buy low and to sell high, their primary concern is
with anticipating and profiting from the expected market fluctuations. The only gain
from such investments is the positive difference between selling and purchasing prices.
Of course, using short-term investment strategies investors can use for speculations other
investment vehicles, such as common stock, but here we try to accentuate the specific
types of investments which are more risky than other investment vehicles because of
their nature related with more uncertainty about the changes influencing the their price
in the future.
Speculative investment vehicles could be presented by these different vehicles:
• Options;
• Futures;
• Commodities, traded on the exchange (coffee, grain metals, other
commodities);
Options are the derivative financial instruments. An options contract gives the
owner of the contract the right, but not the obligation, to buy or to sell a financial asset
at a specified price from or to another party. The buyer of the contract must pay a fee
(option price) for the seller. There is a big uncertainty about if the buyer of the option
will take the advantage of it and what option price would be relevant, as it depends not
only on demand and supply in the options market, but on the changes in the other market
where the financial asset included in the option contract are traded. Though, the option
is a risky financial instrument for those investors who use it for speculations instead of
hedging. The main aspects of using options for investment will be discussed in Chapter
7.

Futures are the other type of derivatives. A future contract is an agreement

between two parties than they agree tom transact with the respect to some financial asset
at a predetermined price at a specified future date. One party agree to buy the financial
asset, the other agrees to sell the financial asset. It is very important, that in futures
contract case both parties are obligated to perform and neither party charges the fee.

There are two types of people who deal with options (and futures) contracts:
speculators and hedgers. Speculators buy and sell futures for the sole purpose of making
a profit by closing out their positions at a price that is better than the initial price. Such
people neither produce nor use the asset in the ordinary course of business. In contrary,
hedgers buy and sell futures to offset an otherwise risky position in the market.
Transactions using derivatives instruments are not limited to financial assets.
There are derivatives, involving different commodities (coffee, grain, precious metals
and other commodities). But in this course the target is on derivatives where underlying
asset is a financial asset.
Other investment tools:
• Various types of investment funds;
• Investment life insurance;
• Pension funds;
• Hedge funds.
Investment companies/ investment funds. They receive money from investors
with the common objective of pooling the funds and then investing them in securities
according to a stated set of investment objectives. Two types of funds:
• open-end funds (mutual funds) ,
• closed-end funds (trusts).
Open-end funds have no pre-determined amount of stocks outstanding and they
can buy back or issue new shares at any point. Price of the share is not determined by
demand, but by an estimate of the current market value of the fund’s net assets per share
(NAV) and a commission.
Closed-end funds are publicly traded investment companies that have issued a
specified number of shares and can only issue additional shares through a new public
issue. Pricing of closed-end funds is different from the pricing of open-end funds: the
market price can differ from the NAV.
Insurance Companies are in the business of assuming the risks of adverse events
(such as fires, accidents, etc.) in exchange for a flow of insurance premiums. Insurance
companies are investing the accumulated funds in securities (treasury bonds, corporate
stocks and bonds), real estate. Three types of Insurance Companies: life insurance; non-
life insurance (also known as property-casualty insurance) and re-insurance. During
recent years investment life insurance became very popular investment alternative for
individual investors, because this hybrid investment product allows to buy the life
insurance policy together with possibility to invest accumulated life insurance payments
or lump sum for a long time selecting investment program relevant to investor‘s future
expectations.
Pension Funds are an asset pools that accumulates over an employee’s working
years and pays retirement benefits during the employee’s nonworking years. Pension
funds are investing the funds according to a stated set of investment objectives in
securities (treasury bonds, corporate stocks and bonds), real estate.
Hedge funds are unregulated private investment partnerships, limited to
institutions and high-net-worth individuals, which seek to exploit various market
opportunities and thereby to earn larger returns than are ordinarily available. They
require a substantial initial investment from investors and usually have some restrictions
on how quickly investor can withdraw their funds. Hedge funds take concentrated
speculative positions and can be very risky. It could be noted that originally, the term
“hedge” made some sense when applied to these funds. They would by combining
different types of investments, including derivatives, try to hedge risk while seeking
higher return. But today the word “hedge’ is misapplied to these funds because they
generally take an aggressive strategies investing in stock, bond and other financial
markets around the world and their level of risk is high.

1.2. Investment management process

Investment management process is the process of managing money or funds.
The investment management process describes how an investor should go about making
decisions.
Investment management process can be disclosed by five-step procedure, which
includes following stages:
1. Setting of investment policy.
2. Analysis and evaluation of investment vehicles.
3. Formation of diversified investment portfolio.
4. Portfolio revision
5. Measurement and evaluation of portfolio performance.
 Setting of investment policy is the first and very important step in investment
management process. Investment policy includes setting of investment objectives. The
investment policy should have the specific objectives regarding the investment return
requirement and risk tolerance of the investor. For example, the investment policy may
define that the target of the investment average return should be 15 % and should avoid
more than 10 % losses. Identifying investor’s tolerance for risk is the most important
objective, because it is obvious that every investor would like to earn the highest return
possible. But because there is a positive relationship between risk and return, it is not
appropriate for an investor to set his/ her investment objectives as just “to make a lot of
money”. Investment objectives should be stated in terms of both risk and return.

The investment policy should also state other important constrains which could
influence the investment management. Constrains can include any liquidity needs for
the investor, projected investment horizon, as well as other unique needs and preferences
of investor. The investment horizon is the period of time for investments. Projected time
horizon may be short, long or even indefinite.
Setting of investment objectives for individual investors is based on the
assessment of their current and future financial objectives. The required rate of return
for investment depends on what sum today can be invested and how much investor needs
to have at the end of the investment horizon. Wishing to earn higher income on his / her
investments investor must assess the level of risk he /she should take and to decide if it
is relevant for him or not. The investment policy can include the tax status of the investor.
This stage of investment management concludes with the identification of the potential
categories of financial assets for inclusion in the investment portfolio. The identification
of the potential categories is based on the investment objectives, amount of investable
funds, investment horizon and tax status of the investor. From the section 1.3.1 we could
see that various financial assets by nature may be more or less risky and in general their
ability to earn returns differs from one type to the other. As an example, for the investor
with low tolerance of risk common stock will be not appropriate type of investment.

Analysis and evaluation of investment vehicles. When the investment policy

is set up, investor’s objectives defined and the potential categories of financial assets for
inclusion in the investment portfolio identified, the available investment types can be
analyzed. This step involves examining several relevant types of investment vehicles
and the individual vehicles inside these groups. For example, if the common stock was
identified as investment vehicle relevant for investor, the analysis will be concentrated
to the common stock as an investment. The one purpose of such analysis and evaluation
is to identify those investment vehicles that currently appear to be mispriced. There are
many different approaches how to make such analysis. Most frequently two forms of
analysis are used: technical analysis and fundamental analysis.

Technical analysis involves the analysis of market prices in an attempt to

predict future price movements for the particular financial asset traded on the market.

This analysis examines the trends of historical prices and is based on the assumption that
these trends or patterns repeat themselves in the future. Fundamental analysis in its
simplest form is focused on the evaluation of intrinsic value of the financial asset. This
valuation is based on the assumption that intrinsic value is the present value of future
flows from particular investment. By comparison of the intrinsic value and market value
of the financial assets those which are underpriced or overpriced can be identified.
Fundamental analysis will be examined in Chapter 4.
This step involves identifying those specific financial assets in which to invest
and determining the proportions of these financial assets in the investment portfolio.
Formation of diversified investment portfolio is the next step in investment
management process. Investment portfolio is the set of investment vehicles, formed by
the investor seeking to realize its’ defined investment objectives. In the stage of portfolio
formation the issues of selectivity, timing and diversification need to be addressed by the
investor. Selectivity refers to micro forecasting and focuses on forecasting price
movements of individual assets. Timing involves macro forecasting of price movements
of particular type of financial asset relative to fixed-income securities in general.
Diversification involves forming the investor’s portfolio for decreasing or limiting risk
of investment. 2 techniques of diversification:

• random diversification, when several available financial assets are put to the
portfolio at random;
• objective diversification when financial assets are selected to the portfolio
following investment objectives and using appropriate techniques for analysis
and evaluation of each financial asset.
Investment management theory is focused on issues of objective portfolio diversification
and professional investors follow settled investment objectives then constructing and
managing their portfolios.
Portfolio revision. This step of the investment management process concerns
the periodic revision of the three previous stages. This is necessary, because over time
investor with long-term investment horizon may change his / her investment objectives
and this, in turn means that currently held investor’s portfolio may no longer be optimal
and even contradict with the new settled investment objectives. Investor should form the
new portfolio by selling some assets in his portfolio and buying the
others that are not currently held. It could be the other reasons for revising a given
portfolio: over time the prices of the assets change, meaning that some assets that were
attractive at one time may be no longer be so. Thus investor should sell one asset ant
buy the other more attractive in this time according to his/ her evaluation. The decisions
to perform changes in revising portfolio depend, upon other things, in the transaction
costs incurred in making these changes. For institutional investors portfolio revision is
continuing and very important part of their activity. But individual investor managing
portfolio must perform portfolio revision periodically as well. Periodic re-evaluation of
the investment objectives and portfolios based on them is necessary, because financial
markets change, tax laws and security regulations change, and other events alter stated
investment goals.

Measurement and evaluation of portfolio performance. This the last step in

investment management process involves determining periodically how the portfolio
performed, in terms of not only the return earned, but also the risk of the portfolio. For
evaluation of portfolio performance appropriate measures of return and risk and
benchmarks are needed. A benchmark is the performance of predetermined set of assets,
obtained for comparison purposes. The benchmark may be a popular index of
appropriate assets – stock index, bond index. The benchmarks are widely used by
institutional investors evaluating the performance of their portfolios.
It is important to point out that investment management process is continuing
process influenced by changes in investment environment and changes in investor’s
attitudes as well. Market globalization offers investors new possibilities, but at the same
time investment management become more and more complicated with growing
uncertainty.

Summary
1. The common target of investment activities is to “employ” the money (funds) during
the time period seeking to enhance the investor’s wealth. By foregoing consumption
today and investing their savings, investors expect to enhance their future
consumption possibilities by increasing their wealth.
2. Corporate finance area of studies and practice involves the interaction between firms
and financial markets and Investments area of studies and practice involves the
interaction between investors and financial markets. Both Corporate Finance and
Investments are built upon a common set of financial principles, such as the
present value, the future value, the cost of capital). And very often investment and
financing analysis for decision making use the same tools, but the interpretation of the
results from this analysis for the investor and for the financier would be different.
3. Direct investing is realized using financial markets and indirect investing involves
financial intermediaries. The primary difference between these two types of
investing is that applying direct investing investors buy and sell financial assets and
manage individual investment portfolio themselves; contrary, using indirect type of
investing investors are buying or selling financial instruments of financial
intermediaries (financial institutions) which invest large pools of funds in the
financial markets and hold portfolios. Indirect investing relieves investors from
making decisions about their portfolio.

4. Investment environment can be defined as the existing investment vehicles in the

market available for investor and the places for transactions with these investment
vehicles.
5. The most important characteristics of investment vehicles on which bases the overall
variety of investment vehicles can be assorted are the return on investment and the
risk which is defined as the uncertainty about the actual return that will be earned on
an investment. Each type of investment vehicles could be characterized by certain
level of profitability and risk because of the specifics of these financial instruments.
The main types of financial investment vehicles are: short- term investment vehicles;
fixed-income securities; common stock; speculative investment vehicles; other
investment tools.
6. Financial markets are designed to allow corporations and governments to raise new
funds and to allow investors to execute their buying and selling orders. In financial
markets funds are channeled from those with the surplus, who buy securities, to
those, with shortage, who issue new securities or sell existing securities.
7. All securities are first traded in the primary market, and the secondary market
provides liquidity for these securities. Primary market is where corporate and
government entities can raise capital and where the first transactions with the new
issued securities are performed. Secondary market - where previously issued
securities are traded among investors. Generally, individual investors do not have
access to secondary markets. They use security brokers to act as intermediaries for

them.
8. Financial market, in which only short-term financial instruments are traded, is
Money market, and financial market in which only long-term financial instruments
are traded is Capital market.
9. The investment management process describes how an investor should go about
making decisions. Investment management process can be disclosed by five-step
 procedure, which includes following stages: (1) setting of investment policy; (2)
analysis and evaluation of investment vehicles; (3) formation of diversified
investment portfolio; (4) portfolio revision; (5) measurement and evaluation of
portfolio performance.
10. Investment policy includes setting of investment objectives regarding the investment
return requirement and risk tolerance of the investor. The other constrains which
investment policy should include and which could influence the investment
management are any liquidity needs, projected investment horizon and preferences
of the investor.
11. Investment portfolio is the set of investment vehicles, formed by the investor seeking
to realize its’ defined investment objectives. Selectivity, timing and diversification
are the most important issues in the investment portfolio formation. Selectivity refers
to micro forecasting and focuses on forecasting price movements of individual
assets. Timing involves macro forecasting of price movements of particular type of
financial asset relative to fixed-income securities in general. Diversification involves
forming the investor’s portfolio for decreasing or limiting risk of investment.
 Questions and problems
1. Distinguish investment and speculation.
2. Explain the difference between direct and indirect investi.
3. How could you describe the investment environment?
4. Classify the following types of financial assets as long-term and short term:
a) Repurchase agreements
b) Treasury Bond
c) Common stock
d) Commercial paper
e) Preferred Stock
f) Certificate of Deposit
5. Comment the differences between investment in financial and physical assets
using following characteristics:
a) Divisibility
b) Liquidity
c) Holding period
d) Information ability
6. Why preferred stock is called hybrid financial security?

7. Why Treasury bills considered being a risk free investment?

8. Describe how investment funds, pension funds and life insurance companies each
act as financial intermediaries.
9. Distinguish closed-end funds and open-end funds.
10. How do you understand why word “hedge’ currently is misapplied to hedge funds?
11. Explain the differences between
a) Money market and capital market;
b) Primary market and secondary market.
12. Why the role of the organized stock exchanges is important in the modern
economies?
13. What factors might an individual investor take into account in determining his/ her
investment policy?
14. Define the objective and the content of a five-step procedure.
15. What are the differences between technical and fundamental analysis?
16. Explain why the issues of selectivity, timing and diversification are important
when forming the investment portfolio.
17. Think about your investment possibilities for 3 years holding period in real
investment environment.
a) What could be your investment objectives?
 b) What amount of funds you could invest for 3 years period?
c) What investment vehicles could you use for investment? (What types of
investment vehicles are available in your investment environment?)
d) What type(-es) of investment vehicles would be relevant to you? Why?
e) What factors would be critical for your investment decision making in this
particular investment environment?

References and further readings

1. Black, John, Nigar Hachimzade, Gareth Myles (2009). Oxford Dictionary of
Economics. 3rd ed. Oxford University Press Inc., New York.
2. Bode, Zvi, Alex Kane, Alan J. Marcus (2005). Investments. 6th ed. McGraw Hill.
3. Fabozzi, Frank J. (1999). Investment Management. 2nd. ed. Prentice Hall Inc.

4. Francis, Jack C., Roger Ibbotson (2002). Investments: A Global Perspective.

Prentice Hall Inc.
5. Haan, Jakob, Sander Oosterloo, Dirk Schoenmaker (2009).European Financial
Markets and Institutions. Cambridge University Press.
6. Jones, Charles P. (2010). Investments Principles and Concepts. John Wiley &
Sons, Inc.
7. LeBarron, Dean, Romesh Vaitlingam (1999). Ultimate Investor. Capstone.
8. Levy, Haim, Thierry Post (2005). Investments. FT / Prentice Hall.
9. Rosenberg, Jerry M. (1993).Dictionary of Investing. John Wiley &Sons Inc.
10. Sharpe, William F. Gordon J.Alexander, Jeffery V.Bailey. (1999). Investments.
International edition. Prentice –Hall International.