Excel Modeling in Investments

Preface&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; vii <p style="margin:0px;">Fifth Edition Changes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; vii</p> <p style="margin:0px;">Ready-To-Build Spreadsheets vii</p> <p style="margin:0px;">What Is Unique About This Book&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; xi</p> <p style="margin:0px;">Conventions Used In This Book xii</p> <p style="margin:0px;">Craig’s Challenge&nbsp; xiv</p> <p style="margin:0px;">Excel® Modeling Books&nbsp;&nbsp; xiv</p> <p style="margin:0px;">Suggestions for Faculty Members&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; xiv</p> <p style="margin:0px;">Acknowledgements&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; xv</p> <p style="margin:0px;">About The Author&nbsp; xvi</p> <p style="margin:0px;">PART 1 BONDS / FIXED INCOME SECURITIES&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1</p> <p style="margin:0px;">Chapter 1 Bond Pricing&nbsp;&nbsp; 1</p> <p style="margin:0px;">1.1 Annual Payments&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1</p> <p style="margin:0px;">1.2 EAR, APR, and Foreign Currencies&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2</p> <p style="margin:0px;">1.3 Duration and Convexity&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7</p> <p style="margin:0px;">1.4 Price Sensitivity&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9</p> <p style="margin:0px;">1.5 Immunization&nbsp; 11</p> <p style="margin:0px;">1.6 System of Five Bond Variables&nbsp;&nbsp;&nbsp;&nbsp; 17</p> <p style="margin:0px;">Problems&nbsp;&nbsp;&nbsp;&nbsp; 18</p> <p style="margin:0px;">Chapter 2 The Yield Curve&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21</p> <p style="margin:0px;">2.1 Obtaining It From Treasury Bills and Strips&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21</p> <p style="margin:0px;">2.2 Using It To Price A Coupon Bond&nbsp; 22</p> <p style="margin:0px;">2.3 Using It To Determine Forward Rates&nbsp;&nbsp;&nbsp; 23</p> <p style="margin:0px;">Problems&nbsp;&nbsp;&nbsp;&nbsp; 24</p> <p style="margin:0px;">Chapter 3 Affine Yield Curve Models&nbsp; 25</p> <p style="margin:0px;">3.1 US Yield Curve Dynamics&nbsp;&nbsp;&nbsp; 25</p> <p style="margin:0px;">3.2 The Vasicek Model&nbsp;&nbsp; 30</p> <p style="margin:0px;">3.3 The Cox-Ingersoll-Ross Model&nbsp;&nbsp;&nbsp; 32</p> <p style="margin:0px;">Problems&nbsp;&nbsp;&nbsp;&nbsp; 34</p> <p style="margin:0px;">PART 2 PORTFOLIO MANAGEMENT&nbsp;&nbsp;&nbsp; 35</p> <p style="margin:0px;">Chapter 4 Portfolio Optimization&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35</p> <p style="margin:0px;">4.1 Two Risky Assets and a Riskfree Asset&nbsp; 35</p> <p style="margin:0px;">4.2 Descriptive Statistics 38</p> <p style="margin:0px;">4.3 Many Risky Assets and a Riskfree Asset&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 42</p> <p style="margin:0px;">4.4 Any Number of Risky Assets&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 52</p> <p style="margin:0px;">Problems&nbsp;&nbsp;&nbsp;&nbsp; 57</p> <p style="margin:0px;">Chapter 5 Constrained Portfolio Optimization&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 58</p> <p style="margin:0px;">5.1 No Short Sales, No Borrowing, and Other Constraints&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 58</p> <p style="margin:0px;">5.2 Any Number of Risky Assets&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 68</p> <p style="margin:0px;">Problems&nbsp;&nbsp;&nbsp;&nbsp; 77</p> <p style="margin:0px;">Chapter 6 Portfolio Performance&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 78</p> <p style="margin:0px;">6.1 Evaluation Measures 78</p> <p style="margin:0px;">Problems&nbsp;&nbsp;&nbsp;&nbsp; 80</p> <p style="margin:0px;">Chapter 7 Portfolio Diversification Lowers Risk&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 81</p> <p style="margin:0px;">7.1 Basics&nbsp;&nbsp; 81</p> <p style="margin:0px;">7.2 International&nbsp;&nbsp; 82</p> <p style="margin:0px;">Problems&nbsp;&nbsp;&nbsp;&nbsp; 84</p> <p style="margin:0px;">PART 3 SECURITY ANALYSIS&nbsp;&nbsp;&nbsp;&nbsp; 85</p> <p style="margin:0px;">Chapter 8 Stock Valuation&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 85</p> <p style="margin:0px;">8.1 Dividend Discount Mode</p>