Investments

Many individuale find investments to be fascinating because they cant actively participate in the decision-making process and see the results of their choices Of course, not all investments will be profitable because you will not always make the correct investment decision Over a period of years, however, you should earn a positive return on a diversified portfolio In addition, there is a thrill from a mit for success, along with the agony associated with the stock that dramatically rose after you sold or did not buy. Both the big fish you catch and the big fish that get away can make make wonderful stories.

Investing of course, is not a game, but a serious subject that can have a major impact on your future well-being. Virtually everyone makes investments. Even if the individual does not select specific assets such as the stock of AT&T or federal government Series EB (Patriot) bonds, investments are still made through partici pation of in pension plans and employee savings programs or through the purchase whole life insurance or a home. Each of these investments has common charac teristics such as the potential return and the risk you must bear. The future is un certain, and you must determine how much risk higher return is associated with accepting more risk. you are willing to bear since a

You may find investing daunting because of specialized jargon or having to deal with sophisticated professionals. A primary aim of this textbook is to make investing less difficult by explaining the terms, by elucidating the possible alter natives, and by discussing many of the techniques used by professionals to value an asset and to construct a portfolio. While this textbook cannot show you a short cut to financial wealth, it can reduce your chances of making uninformed invest ment decisions.

This textbook uses a substantial number of examples and illustrations employ ing data that are generally available to the investing public. This information is be lieved to be accurate; however, you should not assume that mention of a specific firm and its securities is a recommendation to buy or sell those securities. The ex amples have been chosen to illustrate specific points, not to pass judgment on in dividual investments.

Many textbooks on investments are written for students with considerable background in accounting, finance, and economics. Not every student, however, who takes an investment course has such background, and these students cannot cope with (or be expected to cope with) the material in advanced textbooks on in vestments. Investments: An Introduction is aimed at these students and covers the basics of investing ranging from descriptive material to the theory of portfolio construction and efficient markets. Some of the concepts (for example, portfolio theory) and some of the alternative investments (such as derivatives) are difficult to understand. There are no shortcuts to learning this material just as there are no shortcuts to wealth. The textbook does assume that the student has a desire to tackle a fascinating subject and to devote real energy to the material.