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Fundamentals of Investing, Global Edition

Fundamentals of Investing, Global Edition

13th Edition

Scott Smart, Lawrence Gitman, Michael Joehnk

Aug 2016, Paperback, 688 pages
ISBN13: 9781292153988
ISBN10: 1292153989
For orders to USA, Canada, Australia, New Zealand or Japan visit your local Pearson website
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For undergraduate courses in Investments.

The Core Concepts and Tools Students Need to Make Informed Investment Decisions

Fundamentals of Investing helps students make informed investment decisions by providing a solid foundation of core concepts and tools. Smart/Gitman/Joehnk use practical, hands-on applications to introduce the topics and techniques used by both personal investors and money managers. The authors integrate a consistent framework based on learning goals to keep students focused in each chapter. Students leave the course with the necessary information for developing, implementing, and monitoring a successful investment program.

The Thirteenth Edition uses a conversational tone to make the foreign language, concepts, and strategies of investing accessible to a student audience. With the help of examples throughout, students learn to make informed decisions in order to achieve investment goals. The book focuses on both individual securities and portfolios, teaching students to consider the risk and return of different types of investments and how to use this knowledge to develop, implement, and monitor goals.

MyFinanceLab™ not included. Students, if MyFinanceLab is a recommended/mandatory component of the course, please ask your instructor for the correct ISBN and course ID. MyFinanceLab should only be purchased when required by an instructor. Instructors, contact your Pearson representative for more information.


MyFinanceLab is an online homework, tutorial, and assessment product designed to personalize learning and improve results. With a wide range of interactive, engaging, and assignable activities, students are encouraged to actively learn and retain tough course concepts.

Part I: Preparing to Invest

1. The Investment Environment

2. Securities Markets and Transactions

3. Investment Information and Securities Transactions

Part II: Important Conceptual Tools

4. Return and Risk

5. The Time Value of Money

6. Modern Portfolio Concepts

Part III: Investing in Common Stocks

7. Common Stocks

8. Analyzing Common Stocks

9. Stock Valuation

10. Market Efficiency and Behavioral Finance

Part IV: Investing in Fixed-Income Securities

11. Fixed-Income Securities

12. Bond Valuation

Part V: Portfolio Management

13. Mutual Funds and Exchange-Traded Funds

14. Managing Your Own Portfolio

Part VI: Derivative Securities

15. Options: Puts and Calls

16. Futures Markets and Securities

Web Chapters (at www.pearsonhighered.com/smart)

17. Investing in Preferred Stocks

18. Tax-Advantaged Investments

19. Real Estate and Other Tangible Investments

This title is a Pearson Global Edition. The Editorial team at Pearson has worked closely with educators around the world to include content, which is especially relevant to students outside the United States.

About the Book

Hallmark Features

  • A Learning Goal System frames each chapter, providing students with an accessible layout and a clear roadmap through a tightly woven structure that links each header, end-of-chapter summary, discussion questions, problems, and cases.
  • A friendly and engaging writing style gets students invested in the material, helping them to learn the material the first time and review the material before exams.
  • A flexible chapter structure allows professors to easily integrate the text into their syllabi. The first section describes the overall investment environment. The second section presents the conceptual tools needed by investors--the concepts of risk and return and the basics of portfolio construction. Then each of the popular investment vehicles--common stocks, bonds, preferred stocks, convertible securities, and mutual funds--is addressed. A chapter on how to apply these concepts to administer a personal portfolio follows, culminating in a section on derivative securities, options, and futures.
  • A clear focus on the individual investor gives students the basic tools and techniques they need to develop, implement, and monitor a successful investment program.
  • Timely topics take changes in the investment environment into account, such as recent financial crises and scandals that remind students that investing is just as much about risk as it is about returns.
  • A focus on globalization emphasizes the growth of global securities markets and international investing as a major trend in the market.
  • A comprehensive, integrated learning system makes it clear what each student should learn from the chapter at hand, allowing them to successfully focus their efforts throughout the course.

Provides the Most Recent Material On the Topic

  • UPDATED! Lead Author Scott Smart received his PhD from Stanford University in 1991, and he has been a member of the finance faculty at Indiana University since then. He is currently Associate Chair of the MBA Program at Indiana University's Kelley School of Business. His scholarly articles have appeared in the Journal of Financial Economics, the Journal of Finance, Financial Management, the Financial Review, the Journal of Accounting and Economics, and other scholarly journals. He has been recognized as an outstanding teacher by Business Week, and he has won more than a dozen teaching awards. Readers will see Scott’s imprint on every page.
  • UPDATED! Real-world data through 2015 has been added to the text, tables, and figures.
  • UPDATED! Expanded coverage of mutual funds, ETFs, and hedge funds in Chapter 1 has been added.
  • NEW! Coverage of the free-cash-flow-to-equity-stock valuation in Chapter 8 is new.
  • NEW! and UPDATED! Coverage of behavioral finance throughout, particularly in Chapter 9, as well as new content on the role of arbitrage in moving financial markets toward efficiency is included.
  • NEW! Historical data on interest rates and bond returns in Chapter 10 highlights the link between changes in interest rates and total returns placed on bonds.
  • NEW! Coverage of formulating a personal investment policy statement has been added.
  • Coverage of exchange-traded funds is included (Chapter 12).
  • UPDATED! Expanded use of real-world data in material helps students relate the text to their future careers.

An Enhanced Pedagogy Makes the Text More Engaging for Students

  • NEW! Worked-out solutions to in-text examples were created using Camtasia and are available for students in MyFinanceLab. These can be used as a guide to in-chapter assignments.
  • REVISED! End-of-chapter problems have been revised in most areas of the text.
  • UPDATED! QR codes are now in the margins of each chapter. Students can scan these codes with their smartphones to gain access to videos and other web content that enhance the topical coverage of each chapter.
  • Investor Mistakes feature boxes appear in the margins of most chapters and highlight investment lessons gleaned from the behavioral finance literature.
  • UPDATED! Investor Facts boxes are brief sidebar items that give an interesting statistic or cite an unusual investment experience. Most have been updated, and new boxes have been added.
  • NEW! Famous Failures in Finance is a boxed item that replaces the last edition’s Markets in Crisis feature to highlight lessons from the financial crisis, as well as “problem areas” in the investment world such as market crashes, ethical scandals, and failure to act in the client’s best interest.
  • NEW! Watch Your Behavior features appear in the margins of most chapters and highlight investment lessons gleaned from behavioral finance literature.
  • NEW! and REVISED! Chapter openers now include end-of-chapter problems in most chapters that tie back to the chapter opener.
  • NEW! An Excel@Investing feature provides students with online access to electronic copies of most tables in the text that involve calculations. These allow students to see how changing key assumptions affects results.
  • Key Equations are screened in yellow in the text to help students identify important mathematical relationships.
  • Calculator Keystrokes show students how to use financial calculators for specific equations.
  • Concepts in Review questions appear at the end of each section in the chapter and allow students to test their understanding of the section before they move on to the next one.
  • End-of-Chapter Summaries integrate chapter content with online resources.
  • Learning Goal icons precede each summary item and boldface the learning goal.
  • Case Problems are keyed into the learning goals and encourage students to apply their critical thinking skills to use techniques presented in the chapter, evaluate alternatives, and recommend how an investor might solve a specific problem.
  • Discussion questions guide students in integrating, investigating, and analyzing key concepts presented in the chapter.
  • NEW! CFA Questions are included throughout the text and at the end of five of the book’s six parts.
  • NEW! and REVISED! Problem Sets offer additional homework and learning opportunities within the learning goals.

MyFinanceLab™ not included. Students, if MyFinanceLab is a recommended/mandatory component of the course, please ask your instructor for the correct ISBN and course ID. MyFinanceLab should only be purchased when required by an instructor. Instructors, contact your Pearson representative for more information.

  • 3 Sample CFA Exams include CFA Questions that closely resemble those found on the standard CFA Level-I Exam, giving students the opportunity to test their investment knowledge against that required for the Level-I exam. Each sample exam is unique and consists of a different set of questions, so your students can take any one or all of the exams without running into duplicate questions. Answers are included for immediate reinforcement.
  • End-of-chapter problems available in the text are workable online for students, giving them unlimited practice.
  • A Gradebook lets instructors create assignments that are automatically graded and recorded online.
  • An Advisor's Perspective feature, available in MyFinanceLab, consists of short video clips of professional investment advisors, including some of national prominence (such as Jim Grant of Grant's Interest Rate Observer), talking about the investments topics covered in each chapter.
  • Step-by-step video tutorials featuring author Scott Smart, found in MyFinanceLab, act as a learning aid for select problems.
  • A fully functional financial calculator. Students now have access to a fully functional financial calculator inside MyFinanceLab. Along with access to the calculator within MyFinanceLab, all MyFinanceLab users get free access to the new financial calculator app they can download to their iPhone®, iPad®, or Android device.
  • MyFinanceLab Video Series illustrate key topics, including:
    • Default Risk
    • Market Efficiency
    • Diversification
    • Mutual Fund Performance
    • Castle in the Air Theory
    • Stocks 101/Intro to Stocks
  • Worked Solutions provide step-by-step explanations on how to solve select problems using the exact numbers and data that were presented in the problem. Instructors will have access to the Worked Solutions in preview and review mode.
  • Adaptive Learning. Not every student learns the same way and at the same rate. And now, thanks to advances in adaptive learning technology, you no longer have to teach as if they do. MyLab & Mastering with Adaptive Learning assesses student performance and activity in real time and, using data and analytics, personalizes content to reinforce concepts that target each student’s strengths and weaknesses.
    • Dynamic Study Modules help students study effectively on their own by continuously assessing their activity and performance in real time. Here's how it works: students complete a set of questions with a unique answer format that also asks them to indicate their confidence level. Questions repeat until the student can answer them all correctly and confidently. Once completed, Dynamic Study Modules explain the concept using materials from the text. These are available as graded assignments prior to class, and accessible on smartphones, tablets, and computers.
  • Learning Catalytics™. Generate class discussion, guide your lecture, and promote peer-to-peer learning with real-time analytics. MyFinanceLab with eText now provides Learning Catalytics--an interactive student response tool that uses students’ smartphones, tablets, or laptops to engage them in more sophisticated tasks and thinking. Instructors, you can:
    • Pose a variety of open-ended questions that help your students develop critical thinking skills
    • Monitor responses to find out where students are struggling
    • Use real-time data to adjust your instructional strategy and try other ways of engaging your students during class
    • Manage student interactions by automatically grouping students for discussion, teamwork, and peer-to-peer learning
  • Enhanced eText keeps students engaged in learning on their own time, while helping them achieve greater conceptual understanding of course material. The Enhanced eText’s animations bring learning to life, and its interactive tutorials and exercises allow students to apply the very concepts they’re reading about. The results of all exercises feed into the MyFinanceLab Study Plan, powered by Knewton, which provides an exceptional adaptive learning experience for each individual student. Combining resources that illuminate content with accessible self-assessment, MyFinanceLab with Enhanced eText provides students with a complete digital learning experience–all in one place.
  • Reporting Dashboard. View, analyze, and report learning outcomes clearly and easily, and get the information you need to keep your students on track throughout the course, with the new Reporting Dashboard. Available via the MyFinanceLab Gradebook and fully mobile-ready, the Reporting Dashboard presents student performance data at the class, section, and program levels in an accessible, visual manner.
  • HTML5 Player. In addition to matching the Flash player’s support of Accessibility requirements, the HTML5 player has a new “Show Work” feature to allow students to enter text either from a keyboard or stylus and to draw freehand on different backgrounds, such as a coordinate graph, with multiple fonts and colors. Students can also continue to upload images such as phone-photos of handwritten work. Printing enhancements include:
    • a more pen-and-paper-friendly layout of exercises
    • the ability for instructors to choose whether to print the header; to include an honor statement; and to print with answers inline, after each question, or on a separate sheet
  • Mobile Player. Students and instructors will be able to access multimedia resources and complete assessments right at their fingertips, on any mobile device. Highlights of Pearson's MyFinanceLab Mobile Player:
    • Works on mobile devices and tablets, as well as laptop and desktop computers
    • Fresh and intuitive design
    • Compatible with browser-based magnification settings