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Handbook of Finance: Financial Markets and Instruments

Book Description

Volume I: Financial Markets and Instruments skillfully covers the general characteristics of different asset classes, derivative instruments, the markets in which financial instruments trade, and the players in those markets. It also addresses the role of financial markets in an economy, the structure and organization of financial markets, the efficiency of markets, and the determinants of asset pricing and interest rates.

Incorporating timely research and in-depth analysis, the Handbook of Finance is a comprehensive 3-Volume Set that covers both established and cutting-edge theories and developments in finance and investing. Other volumes in the set: Handbook of Finance Volume II: Investment Management and Financial Management and Handbook of Finance Volume III: Valuation, Financial Modeling, and Quantitative Tools.

Table of Contents

  1. Copyright
  2. About the Editor
  3. Contributors
  4. Preface
    1. TOPIC CATEGORIES
  5. Guide to the Handbook Handbook of Finance
    1. ORGANIZATION
    2. TABLE OF CONTENTS
    3. INDEX
    4. CHAPTERS
  6. 1. Market Players andMarkets
    1. 1. Overview of Financial Instruments and Financial Markets
      1. 1.1. ISSUERS AND INVESTORS
      2. 1.2. DEBT VERSUS EQUITY INSTRUMENTS
      3. 1.3. CHARACTERISTICS OF DEBT INSTRUMENTS
        1. 1.3.1. Maturity
        2. 1.3.2. Par Value
        3. 1.3.3. Coupon Rate
        4. 1.3.4. Provisions for Paying off Debt Instruments
        5. 1.3.5. Options Granted to Bondholders
      4. 1.4. FINANCIAL MARKETS
        1. 1.4.1. Role of Financial Markets
        2. 1.4.2. Classification of Financial Markets
      5. 1.5. DERIVATIVE MARKETS
        1. 1.5.1. Types of Derivative Instruments
      6. 1.6. SUMMARY
      7. 1.7. REFERENCES
    2. 2. Fundamentals of Investing
      1. 2.1. SETTING INVESTMENT OBJECTIVES
      2. 2.2. ESTABLISHING AN INVESTMENT POLICY
        1. 2.2.1. Asset Classes
        2. 2.2.2. Risks Associated with Investing
      3. 2.3. SELECTING A PORTFOLIO STRATEGY
      4. 2.4. CONSTRUCTING THE PORTFOLIO
        1. 2.4.1. Constructing an Indexed Portfolio
        2. 2.4.2. Constructing an Active Portfolio
      5. 2.5. EVALUATING PERFORMANCE
      6. 2.6. SUMMARY
      7. 2.7. REFERENCES
    3. 3. The American Banking System
      1. 3.1. GLOBAL BANKING CONSTANTS
      2. 3.2. STRUCTURE OF THE POST-DEPRESSION BANKING SECTOR
        1. 3.2.1. Features of the "Old Structure" Still in Place
        2. 3.2.2. Product Constraints in American Banking
        3. 3.2.3. Geographic Constraints in American Banking
        4. 3.2.4. Interest Rate Ceilings on Bank Deposits
        5. 3.2.5. Reserve Requirements
        6. 3.2.6. Relationship Banking
      3. 3.3. FORCES FOR CHANGE IN AMERICAN BANKING IN THE 1980s AND 1990s
        1. 3.3.1. External Competition
        2. 3.3.2. Volatility, Risk, and Failure
      4. 3.4. DEREGULATION, REREGULATION, AND TODAY'S EVOLVING BANKING SYSTEM
        1. 3.4.1. Deposit Deregulation
        2. 3.4.2. Risk-Based Capital Standards
        3. 3.4.3. Technological Progress and Bank Developments
        4. 3.4.4. Product Deregulation
        5. 3.4.5. Geographic Deregulation
        6. 3.4.6. Results of Geographic Deregulation
      5. 3.5. THE AMERICAN BANKING SYSTEM WILL CONTINUE TO BE UNIQUE
        1. 3.5.1. The Outlook for Dual Banking
        2. 3.5.2. Continued Technological Advances in Risk Control
        3. 3.5.3. The Future U.S. Regulatory Structure
        4. 3.5.4. The Continued Separation of Depositories from Nonfinancial Firms
      6. 3.6. SUMMARY
      7. 3.7. REFERENCES
    4. 4. Monetary Policy: How the Fed Sets, Implements, and Measures Policy Choices
      1. 4.1. KEY ECONOMIC INFLUENCES ON FED POLICY
      2. 4.2. IMPLEMENTING MONETARY POLICY: THE TRANSMISSION PROCESS
      3. 4.3. THE IMPACT OF MONETARY POLICY: ITS DECLINING DIRECT INFLUENCE
      4. 4.4. GLOBAL CREDIBILITY: THE CENTRAL BANKER'S RESPONSIBILITY
      5. 4.5. SUMMARY
      6. 4.6. REFERENCES
    5. 5. Institutional Aspects of the Securities Markets
      1. 5.1. THE STOCK MARKET EFFICIENCY QUESTION
      2. 5.2. SOME HISTORY
      3. 5.3. THE ROLE OF FINANCIAL INFORMATION IN THE MARKET EFFICIENCY QUESTION
      4. 5.4. THE ROLE OF ORGANIZED MARKETS IN THE MARKET EFFICIENCY QUESTION
      5. 5.5. THE ROLE OF TRADING IN THE MARKET EFFICIENCY QUESTION
      6. 5.6. THE ROLE OF SECURITIES MARKET REGULATION IN THE MARKET EFFICIENCY QUESTION
      7. 5.7. THE ROLE OF STOCK MARKET INDICATORS IN THE MARKET EFFICIENCY QUESTION
      8. 5.8. SUMMARY
      9. 5.9. REFERENCES
    6. 6. Investment Banking
      1. 6.1. TYPES OF INVESTMENT BANKS
        1. 6.1.1. Financial Holding Companies
        2. 6.1.2. Full-Service Investment Banks
        3. 6.1.3. Boutique Investment Banks
      2. 6.2. INVESTMENT BANKING BUSINESS
        1. 6.2.1. Investment Banking
        2. 6.2.2. Trading and Principal Investments
        3. 6.2.3. Asset Management and Securities Services
      3. 6.3. TRENDS AND CHALLENGES
        1. 6.3.1. The Evolving Investment Banking Markets
        2. 6.3.2. Challenges and Opportunities
        3. 6.3.3. Success Factors
      4. 6.4. SUMMARY
      5. 6.5. REFERENCES
    7. 7. Securities Innovation
      1. 7.1. DEBT INNOVATIONS
        1. 7.1.1. Risk Reallocation
        2. 7.1.2. Enhanced Liquidity
        3. 7.1.3. Reductions in Agency Costs
        4. 7.1.4. Reductions in Transaction Costs
        5. 7.1.5. Reductions in Taxes
        6. 7.1.6. Circumvention of Regulatory Restrictions or Other Constraints
      2. 7.2. STRUCTURED PRODUCTS
        1. 7.2.1. What Structured Products Are Designed to Achieve
        2. 7.2.2. Taking a View on Interest Rates
        3. 7.2.3. Transferring Default Risk
      3. 7.3. HYBRID CAPITAL SECURITIES
        1. 7.3.1. Trust Preferred Hybrid Capital Securities
        2. 7.3.2. Newer Hybrid Structures
        3. 7.3.3. Substituting Debt for Equity
      4. 7.4. PREFERRED STOCK INNOVATIONS
        1. 7.4.1. Managing Interest Rate Risk with Preferred Stock
        2. 7.4.2. More Desirable Pattern of Cash Flows
        3. 7.4.3. Other Preferred Stock Innovations
      5. 7.5. CONVERTIBLE SECURITIES INNOVATIONS
        1. 7.5.1. Reallocation of Investment Risk/More Desirable Pattern of Cash Flows
        2. 7.5.2. Reductions in Taxes
        3. 7.5.3. Reductions in Agency Costs
        4. 7.5.4. Reductions in Transaction Costs
        5. 7.5.5. Satisfying Regulatory Restrictions
        6. 7.5.6. Example of a Securities Innovation that Solved a Difficult Corporate Finance Problem
        7. 7.5.7. Dividend Policy
      6. 7.6. COMMON EQUITY INNOVATIONS
        1. 7.6.1. Reallocation of Investment Risk
        2. 7.6.2. Reductions in Agency Costs
        3. 7.6.3. Reductions in Taxes
      7. 7.7. SUMMARY
      8. 7.8. REFERENCES
    8. 8. An Arbitrage Perspective of the Purpose and Structure of Financial Markets
      1. 8.1. RISK SHARING
      2. 8.2. STRUCTURE OF FINANCIAL MARKETS
      3. 8.3. ARBITRAGE: PURE VERSUS RELATIVE
      4. 8.4. FINANCIAL INSTITUTIONS: ASSET TRANSFORMERS AND BROKER-DEALERS
      5. 8.5. PRIMARY AND SECONDARY MARKETS
      6. 8.6. MARKET PLAYERS: HEDGERS VERSUS SPECULATORS
      7. 8.7. SUMMARY
      8. 8.8. REFERENCES
    9. 9. Complete Markets
      1. 9.1. ECONOMIC ORIGINS OF COMPLETE MARKETS
      2. 9.2. COMPLETE MARKETS IN FINANCE
      3. 9.3. SECURITIES PRICING IN COMPLETE MARKETS
      4. 9.4. PRICE INFORMATION IN COMPLETE MARKETS
      5. 9.5. MISSING MARKETS AND FINANCIAL INNOVATION
      6. 9.6. THE MEAN-VARIANCE THEORY IN COMPLETE MARKETS
      7. 9.7. SUMMARY
      8. 9.8. REFERENCES
    10. 10. Introduction to Islamic Finance
      1. 10.1. WHAT IS ISLAMIC FINANCE?
      2. 10.2. PROHIBITIONS AND THEIR IMPLICATIONS
        1. 10.2.1. Riba
        2. 10.2.2. Ina versus Murabaha
        3. 10.2.3. Gharar
        4. 10.2.4. Forwards and Insurance
      3. 10.3. NOMINATE CONTRACTS: FROM BASIC BUILDING BLOCKS TO COMPLEX STRUCTURES
        1. 10.3.1. Murabaha
        2. 10.3.2. Ina and Tawarruq
        3. 10.3.3. Securitization and Ijara
        4. 10.3.4. Sukuk
        5. 10.3.5. Partnerships: Musharaka and Mudaraba
        6. 10.3.6. Benchmarking to LIBOR
        7. 10.3.7. Short-Term Sukuk and Salam
        8. 10.3.8. Parallel Salam
        9. 10.3.9. Miscellaneous Structures
        10. 10.3.10. Derivatives
        11. 10.3.11. The First U.S. Sukuk
      4. 10.4. SUMMARY
      5. 10.5. REFERENCES
  7. 2. Common Stock
    1. 11. The U.S. Equity Markets
      1. 11.1. EXCHANGE MARKET STRUCTURES
        1. 11.1.1. Order-Driven Markets
        2. 11.1.2. Quote-Driven Markets
        3. 11.1.3. Order-Driven versus Quote-Driven Markets
      2. 11.2. CHANGES IN EXCHANGE OWNERSHIP AND TRADING STRUCTURES
      3. 11.3. THE U.S. STOCK MARKETS: EXCHANGES AND OTC MARKETS
        1. 11.3.1. National Exchanges
        2. 11.3.2. Nasdaq Stock Market: The OTC Market
        3. 11.3.3. Other OTC Markets
        4. 11.3.4. Options Markets
        5. 11.3.5. Other Stock Exchange Markets
      4. 11.4. OFF-EXCHANGE MARKETS/ALTERNATIVE ELECTRONIC MARKETS
        1. 11.4.1. Electronic Communications Networks
        2. 11.4.2. Alternative Trading Systems
      5. 11.5. THE CURRENT NYSE STOCK MARKET
        1. 11.5.1. Background
        2. 11.5.2. The Prelude to the NYSE Hybrid Market
        3. 11.5.3. The NYSE Hybrid Market
        4. 11.5.4. Impact of the NYSE Hybrid Market
        5. 11.5.5. Euronext NV
        6. 11.5.6. American Stock Exchange
      6. 11.6. EVOLVING STOCK MARKET PRACTICES
        1. 11.6.1. Order-Handling Rules
        2. 11.6.2. Smart Order Routers
        3. 11.6.3. SEC Regulation NMS
        4. 11.6.4. Internalization
        5. 11.6.5. Alternative Display Facility
        6. 11.6.6. Trade-Reporting Facility
        7. 11.6.7. Direct Market Access
        8. 11.6.8. Algorithmic Trading
      7. 11.7. BASIC FUNCTIONING OF STOCK MARKETS
        1. 11.7.1. Price Reporting
        2. 11.7.2. Regulation
        3. 11.7.3. Clearance and Settlement
        4. 11.7.4. Tick Size
        5. 11.7.5. Short-Selling Rules
        6. 11.7.6. Block Trades
        7. 11.7.7. Commissions
      8. 11.8. SUMMARY
      9. 11.9. APPENDIX: KEY DATES
      10. 11.10. ACKNOWLEDGMENTS
      11. 11.11. REFERENCES
    2. 12. The Information Content of Short Sales
      1. 12.1. SHORT SALES: REPORTING, FREQUENCY, AND CONSTRAINTS
      2. 12.2. ACADEMIC THEORY VERSUS THE TECHNICAL ANALYST'S VIEW
      3. 12.3. THE EMPIRICAL EVIDENCE
        1. 12.3.1. Predicting Short-Term Returns with Short Interest: The Early Evidence
        2. 12.3.2. Predicting Short-Term Returns with and without Hedging and Traded Options
        3. 12.3.3. Predicting Long-Term Returns with Short Interest
        4. 12.3.4. Determinants of Short Interest: Strategies, Profitability, and Information Content
        5. 12.3.5. The Costs of Short Selling as Limits to Arbitrage
        6. 12.3.6. Short-Sales Transactions and the Implications of More Frequent Reporting
      4. 12.4. SOME PRACTICAL IMPLICATIONS
      5. 12.5. SUMMARY
      6. 12.6. REFERENCES
    3. 13. Emerging Stock Market Investment
      1. 13.1. ECONOMIES IN TRANSITION
        1. 13.1.1. Emerging Market Countries
        2. 13.1.2. The Process of Emergence
        3. 13.1.3. Why the Process Will Continue
        4. 13.1.4. Why Progress Is Uneven
      2. 13.2. INVESTMENT CHARACTERISTICS
        1. 13.2.1. Factors Favoring Higher Returns
        2. 13.2.2. Factors Favoring Lower Portfolio Risks
        3. 13.2.3. Implementation Obstacles
      3. 13.3. INVESTMENT APPROACH
        1. 13.3.1. Investment Strategies
      4. 13.4. RELATED RESEARCH
      5. 13.5. SUMMARY
      6. 13.6. REFERENCES
    4. 14. Listed Equity Options and Futures
      1. 14.1. LISTED EQUITY OPTIONS
        1. 14.1.1. Basic Features of Listed Options
      2. 14.2. EQUITY FUTURES CONTRACTS
        1. 14.2.1. Stock Index Futures Contracts
        2. 14.2.2. Single-Stock Futures
      3. 14.3. SUMMARY
      4. 14.4. REFERENCES
    5. 15. OTC Equity Derivatives
      1. 15.1. PRODUCT FUNDAMENTALS AND APPLICATIONS
      2. 15.2. OTC OPTIONS AND WARRANTS
        1. 15.2.1. First-Generation OTC Options
        2. 15.2.2. Exotics: Second-Generation OTC Options
        3. 15.2.3. Using Exotics
      3. 15.3. EQUITY-LINKED DEBT INVESTMENTS
      4. 15.4. EQUITY SWAPS
      5. 15.5. SUMMARY
      6. 15.6. REFERENCES
    6. 16. Volatility Derivatives
      1. 16.1. REALIZED VOLATILITY DERIVATIVE CONTRACTS
        1. 16.1.1. Illustration of the Computation of the Settlement Price of a Realized Volatility Swap
        2. 16.1.2. CBOE Futures Exchange Realized Volatility Futures Contract
        3. 16.1.3. Volatility versus Variance Contracts
        4. 16.1.4. Expected Return/Risk Management Applications
      2. 16.2. IMPLIED VOLATILITY DERIVATIVES CONTRACTS
        1. 16.2.1. Illustration of How to Estimate VIX Futures Price
        2. 16.2.2. Expected Return/Risk Management Applications
        3. 16.2.3. CBOE VIX Options
      3. 16.3. SUMMARY
      4. 16.4. APPENDIX: CONSTRUCTION OF THE CBOE'S MARKET VOLATILITY INDEX (VIX)
      5. 16.5. REFERENCES
  8. 3. Fixed Income Instruments
    1. 17. Bonds: Investment Features and Risks
      1. 17.1. SECTORS OF THE BOND MARKET
      2. 17.2. FEATURES OF BONDS
        1. 17.2.1. Maturity
        2. 17.2.2. Par Value
        3. 17.2.3. Coupon Rate
        4. 17.2.4. Accrued Interest
        5. 17.2.5. Provisions for Paying Off Bonds
        6. 17.2.6. Options Granted to Bondholders
        7. 17.2.7. Currency Denomination
      3. 17.3. YIELD MEASURES
        1. 17.3.1. Current Yield
        2. 17.3.2. Yield to Maturity
        3. 17.3.3. Yield to Call
        4. 17.3.4. Yield to Put
        5. 17.3.5. Yield to Worst
        6. 17.3.6. Cash Flow Yield
      4. 17.4. RISKS ASSOCIATED WITH INVESTING IN BONDS
        1. 17.4.1. Interest Rate Risk
        2. 17.4.2. Call and Prepayment Risk
        3. 17.4.3. Credit Risk
        4. 17.4.4. Liquidity Risk
        5. 17.4.5. Exchange Rate or Currency Risk
        6. 17.4.6. Inflation or Purchasing Power Risk
      5. 17.5. SUMMARY
      6. 17.6. REFERENCES
    2. 18. Residential Mortgages
      1. 18.1. OVERVIEW OF MORTGAGES
        1. 18.1.1. Key Attributes that Define Mortgages
        2. 18.1.2. Prepayments and Prepayment Penalties
      2. 18.2. MORTGAGE LOAN MECHANICS
      3. 18.3. RISKS ASSOCIATED WITH MORTGAGES AND MORTGAGE PRODUCTS
        1. 18.3.1. Prepayment Risk
        2. 18.3.2. Credit and Default Risk
      4. 18.4. SUMMARY
      5. 18.5. REFERENCES
    3. 19. Reverse Mortgages
      1. 19.1. HOW A REVERSE MORTGAGE WORKS
      2. 19.2. PROGRAMS
        1. 19.2.1. HECM Program
        2. 19.2.2. Fannie Mae Home Keeper
        3. 19.2.3. Proprietary Products
      3. 19.3. SUMMARY
      4. 19.4. REFERENCES
    4. 20. U.S. Treasury Securities
      1. 20.1. TYPES OF MARKETABLE TREASURY SECURITIES
        1. 20.1.1. Fixed-Principal Treasury Securities
      2. 20.2. TREASURY AUCTION PROCESS
      3. 20.3. SECONDARY MARKET
        1. 20.3.1. Price Quotes for Treasury Bills
        2. 20.3.2. Quotes on Treasury Coupon Securities
      4. 20.4. STRIPPED TREASURY SECURITIES
      5. 20.5. SUMMARY
      6. 20.6. REFERENCES
    5. 21. Federal Agency Securities
      1. 21.1. FEDERALLY RELATED INSTITUTIONS
        1. 21.1.1. Tennessee Valley Authority
      2. 21.2. GOVERNMENT-SPONSORED ENTERPRISES
        1. 21.2.1. Types and Features of GSE Securities
        2. 21.2.2. Programmatic GSE Issuance Platforms
        3. 21.2.3. Description of GSEs and Securities Issued
        4. 21.2.4. Fannie Mae
        5. 21.2.5. Freddie Mac
        6. 21.2.6. Federal Home Loan Bank System (FHL Banks)
        7. 21.2.7. The Federal Agricultural Mortgage Corporation (Farmer Mac)
        8. 21.2.8. Federal Farm Credit Bank System (Farm Credit)
        9. 21.2.9. Sallie Mae
        10. 21.2.10. Financing Corporation (FICO)
        11. 21.2.11. Resolution Trust Corporation (REFCORP)
        12. 21.2.12. Farm Credit Financial Assistance Corporation (FACO)
        13. 21.2.13. Repo Transactions Market in GSE Debt Collateral
        14. 21.2.14. Credit Risk
        15. 21.2.15. Yield Spreads
      3. 21.3. SUMMARY
      4. 21.4. REFERENCES
    6. 22. Municipal Securities
      1. 22.1. ISSUERS AND ISSUANCE PROCEDURES
      2. 22.2. TAX-EXEMPT AND TAXABLE MUNICIPAL SECURITIES
      3. 22.3. TAX PROVISIONS AFFECTING MUNICIPAL SECURITIES
        1. 22.3.1. Treatment of Original-Issue Discount
        2. 22.3.2. Alternative Minimum Tax
        3. 22.3.3. Deductibility of Interest Expense Incurred to Acquire Municipals
      4. 22.4. TYPES OF MUNICIPAL SECURITIES
        1. 22.4.1. Tax-Backed Debt
        2. 22.4.2. Revenue Bonds
        3. 22.4.3. Special Bond Structures
      5. 22.5. MUNICIPAL BOND YIELDS
      6. 22.6. FLOATING-RATE MUNICIPAL SECURITIES
      7. 22.7. RISKS ASSOCIATED WITH INVESTING IN MUNICIPAL BONDS
      8. 22.8. SUMMARY
      9. 22.9. REFERENCES
    7. 23. Corporate Fixed Income Securities
      1. 23.1. CORPORATE BONDS
        1. 23.1.1. Secured Debt and Unsecured Debt
        2. 23.1.2. Provisions for Paying Off Bonds
        3. 23.1.3. Speculative-Grade Bonds
        4. 23.1.4. Secondary Market
        5. 23.1.5. Private-Placement Market for Corporate Bonds
      2. 23.2. MEDIUM-TERM NOTES
        1. 23.2.1. Primary Market
        2. 23.2.2. Structured MTNs
      3. 23.3. PREFERRED STOCK
        1. 23.3.1. Tax Treatment of Dividends
      4. 23.4. SUMMARY
      5. 23.5. REFERENCES
    8. 24. The Eurobond Market
      1. 24.1. EUROBONDS
      2. 24.2. FOREIGN BONDS
      3. 24.3. EUROBOND INSTRUMENTS
        1. 24.3.1. Conventional Bonds
        2. 24.3.2. Floating-Rate Notes
        3. 24.3.3. Zero-Coupon Bonds
        4. 24.3.4. Convertible Bonds
        5. 24.3.5. Eurowarrants
      4. 24.4. THE ISSUING PROCESS: MARKET PARTICIPANTS
        1. 24.4.1. The Borrowing Parties
        2. 24.4.2. The Underwriting Lead Manager
        3. 24.4.3. The Co-lead Manager
        4. 24.4.4. Investors
      5. 24.5. FEES, EXPENSES, AND PRICING
        1. 24.5.1. Fees
        2. 24.5.2. Expenses
        3. 24.5.3. Pricing
      6. 24.6. ISSUING THE BOND
        1. 24.6.1. The Gray Market
        2. 24.6.2. Alternative Issue Procedures
      7. 24.7. COVENANTS
        1. 24.7.1. Negative Pledge
        2. 24.7.2. Disposal of Assets Covenant
        3. 24.7.3. Gearing Ratio Covenant
      8. 24.8. TRUST SERVICES
        1. 24.8.1. Depositary
        2. 24.8.2. Paying Agent
        3. 24.8.3. Registrar
        4. 24.8.4. Trustee
        5. 24.8.5. Custodian
        6. 24.8.6. Fiscal Agent
        7. 24.8.7. Listing Agent
      9. 24.9. FORM OF THE BOND
        1. 24.9.1. Temporary Global Note
        2. 24.9.2. Permanent Global Note
        3. 24.9.3. Definitive Note
        4. 24.9.4. Registered Bonds
      10. 24.10. CLEARING SYSTEMS
      11. 24.11. SECONDARY MARKET
      12. 24.12. LEGAL AND TAX ISSUES
      13. 24.13. EUROBONDS AND SWAP TRANSACTIONS
      14. 24.14. SETTLEMENT
      15. 24.15. SUMMARY
      16. 24.16. REFERENCES
    9. 25. The Euro Government Bond Market
      1. 25.1. THE EUROZONE: THE FASTEST-GROWING GOVERNMENT BOND MARKET
        1. 25.1.1. Country Breakdown
        2. 25.1.2. Maturity Breakdown
      2. 25.2. EURO GOVERNMENT BOND PRIMARY MARKET
        1. 25.2.1. Measures to Improve Market Liquidity
        2. 25.2.2. Bond Auctions: Sizes, Maturities, and Types of Bond
        3. 25.2.3. Exchange Auctions and Buybacks
        4. 25.2.4. Other Key Characteristics of the Primary Markets
      3. 25.3. SECONDARY MARKET AND INTRA-EURO SPREAD DETERMINANTS
        1. 25.3.1. Sovereign Credit Ratings
        2. 25.3.2. Other Intra-Euro Bond Spread Drivers
        3. 25.3.3. Bond Swap Spreads and Their Relationship to Peripheral Spreads
        4. 25.3.4. Market Volatility as a Spread Driver
        5. 25.3.5. Other Related Markets
        6. 25.3.6. Interest Rate Swaps as the Benchmark Curve for Eurozone Government Bonds
      4. 25.4. SUMMARY
      5. 25.5. REFERENCES
    10. 26. The German Pfandbrief and European Covered Bonds Market
      1. 26.1. THE PFANDBRIEF MARKET
      2. 26.2. HISTORY OF THE PFANDBRIEF
      3. 26.3. KEY FEATURES OF INVESTOR INTEREST
        1. 26.3.1. Reduction of Credit Risk
        2. 26.3.2. Liquidity
      4. 26.4. MARKET INSTRUMENTS
        1. 26.4.1. Global Pfandbriefe
        2. 26.4.2. Structured Pfandbriefe
        3. 26.4.3. MTN and CP Programs
        4. 26.4.4. Clearing
      5. 26.5. KEY DIFFERENCES BETWEEN COVERED BONDS AND ABSs OR MBSs
      6. 26.6. MARKET PARTICIPANTS
      7. 26.7. THE CREDIT RATING APPROACH TOWARDS PFANDBRIEFE
      8. 26.8. THE EUROPEAN COVERED BOND MARKET
        1. 26.8.1. France
        2. 26.8.2. Spain
        3. 26.8.3. Luxembourg
        4. 26.8.4. Ireland
      9. 26.9. SUMMARY
      10. 26.10. REFERENCES
    11. 27. Commercial Paper
      1. 27.1. CHARACTERISTICS OF COMMERCIAL PAPER
        1. 27.1.1. Direct Paper versus Dealer Paper
        2. 27.1.2. The Secondary Market
      2. 27.2. COMMERCIAL PAPER CREDIT RATINGS
        1. 27.2.1. Yields on Commercial Paper
      3. 27.3. ASSET-BACKED COMMERCIAL PAPER
        1. 27.3.1. Legal Structure
        2. 27.3.2. Basic Types of ABCP Conduits
        3. 27.3.3. Credit and Liquidity Enhancement
        4. 27.3.4. Extendable Note Commercial Paper
        5. 27.3.5. The ABCP Market Outside the United States
        6. 27.3.6. Foreign Currency Denominated Commercial Paper
      4. 27.4. SUMMARY
      5. 27.5. REFERENCES
    12. 28. Money Market Calculations
      1. 28.1. DAY COUNT CONVENTIONS
        1. 28.1.1. Day Count Basis
        2. 28.1.2. Actual/Actual
        3. 28.1.3. Actual/360
        4. 28.1.4. 30/360
      2. 28.2. DISCOUNT INSTRUMENTS
        1. 28.2.1. Yield on a Bank Discount Basis
        2. 28.2.2. CD Equivalent Yield
        3. 28.2.3. Bond-Equivalent Yield
      3. 28.3. INTEREST AT MATURITY INSTRUMENTS
        1. 28.3.1. Converting a CD Yield into a Simple Yield on a 365-Day Basis
        2. 28.3.2. Converting a Periodic Interest Rate into an Effective Annual Yield
      4. 28.4. SUMMARY
      5. 28.5. REFERENCES
    13. 29. Convertible Bonds
      1. 29.1. CONVERTIBLE BOND MARKET
      2. 29.2. GENERAL CHARACTERISTICS OF CONVERTIBLE BONDS
      3. 29.3. ANALYZING CONVERTIBLE SECURITIES: THE TRADITIONAL APPROACH
        1. 29.3.1. Conversion Value versus Straight Value
        2. 29.3.2. Market Conversion Price
        3. 29.3.3. Measuring the Convertible Bond's Income Advantage
        4. 29.3.4. Measuring the Convertible Bond's Downside Risk
      4. 29.4. CONVERTIBLE BONDS AS AN INVESTMENT
      5. 29.5. OTHER TYPES OF CONVERTIBLES
        1. 29.5.1. Mandatory Convertibles
        2. 29.5.2. Reverse Convertibles
      6. 29.6. CONVERTIBLE BOND ARBITRAGE
      7. 29.7. SUMMARY
      8. 29.8. REFERENCES
    14. 30. Syndicated Loans
      1. 30.1. OVERVIEW OF THE SYNDICATED LOAN
        1. 30.1.1. Types of Syndications
      2. 30.2. THE SYNDICATION PROCESS
        1. 30.2.1. The Information Memo or "Bank Book"
        2. 30.2.2. The Loan Investor Market
      3. 30.3. PUBLIC VERSUS PRIVATE
        1. 30.3.1. CREDIT RISK: AN OVERVIEW
        2. 30.3.2. Default Risk
        3. 30.3.3. Loss-Given-Default Risk
      4. 30.4. SYNDICATING A LOAN BY FACILITY
      5. 30.5. PRICING A LOAN IN THE PRIMARY MARKET
        1. 30.5.1. Pricing Loans for Bank Investors
        2. 30.5.2. Pricing Loans for Institutional Players
      6. 30.6. MARK-TO-MARKET'S EFFECT
      7. 30.7. TYPES OF SYNDICATED LOAN FACILITIES
      8. 30.8. SECOND-LIEN LOANS
      9. 30.9. COVENANT-LITE LOANS
      10. 30.10. LENDER TITLES
      11. 30.11. SECONDARY SALES
        1. 30.11.1. Assignments
        2. 30.11.2. Primary Assignments
        3. 30.11.3. Participations
      12. 30.12. DERIVATIVES—LOAN CREDIT DEFAULT SWAPS
      13. 30.13. PRICING TERMS
        1. 30.13.1. Rates
        2. 30.13.2. Fees
        3. 30.13.3. Voting Rights
      14. 30.14. COVENANTS
      15. 30.15. MANDATORY PREPAYMENTS
      16. 30.16. COLLATERAL
        1. 30.16.1. Springing Liens/Collateral Release
        2. 30.16.2. Change of Control
        3. 30.16.3. Asset-Based Lending
        4. 30.16.4. Loan Math: The Art of Spread Calculation
      17. 30.17. SUMMARY
      18. 30.18. REFERENCES
    15. 31. Emerging Markets Debt
      1. 31.1. EMERGING MARKET DEBT INSTRUMENTS
        1. 31.1.1. Emerging Market External Debt
        2. 31.1.2. Emerging Market Local Debt
        3. 31.1.3. Emerging Market Corporate Debt
        4. 31.1.4. Emerging Market Credit Derivatives
        5. 31.1.5. Emerging Market Bond Indices
      2. 31.2. SOVEREIGN CREDIT ANALYSIS
        1. 31.2.1. Economic Considerations
        2. 31.2.2. Political Considerations
        3. 31.2.3. Willingness to Pay
        4. 31.2.4. Sovereign Credit Perspective
      3. 31.3. SUMMARY
      4. 31.4. REFERENCES
    16. 32. Introduction to Mortgage-Backed Securities
      1. 32.1. CREATING DIFFERENT TYPES OF MBS
        1. 32.1.1. Agency MBS Creation
        2. 32.1.2. Private-Label Securitization
      2. 32.2. MBS TRADING
        1. 32.2.1. MBS Market Structure
        2. 32.2.2. Financing and the Dollar Roll Market
      3. 32.3. CASH FLOW STRUCTURING
      4. 32.4. SUMMARY
      5. 32.5. REFERENCES
    17. 33. Structuring Collateralized Mortgage Obligations and Interest-Only/ Principal-Only Securities
      1. 33.1. NON-CASH-FLOW ASPECTS OF CMOs
      2. 33.2. COLLATERALIZED MORTGAGE OBLIGATIONS AS RULES
      3. 33.3. PRINCIPAL-PAY TYPES
      4. 33.4. INTEREST-PAY TYPES
      5. 33.5. SEQUENTIAL BONDS
      6. 33.6. PRO RATA BONDS
      7. 33.7. SCHEDULED BONDS
      8. 33.8. SEQUENTIAL PACs AND OTHER COMBINATIONS
      9. 33.9. INTEREST ONLY AND PRINCIPAL ONLY
      10. 33.10. SENIOR/SUBORDINATED STRUCTURES
      11. 33.11. SUMMARY
      12. 33.12. REFERENCES
    18. 34. Commercial Mortgage-Backed Securities
      1. 34.1. INVESTMENT CHARACTERISTICS OF TRADITIONAL (CASH) CMBS
      2. 34.2. BASIC COMMERCIAL LOAN AND CMBS DEAL STRUCTURES
        1. 34.2.1. Typical Loan Features
        2. 34.2.2. Cash Flow
        3. 34.2.3. CMBS Bond Structure
        4. 34.2.4. Super-Senior and Super-Duper Senior Bonds
        5. 34.2.5. CMBS Relative Value
      3. 34.3. RISK CHARACTERISTICS OF COMMERCIAL REAL ESTATE COLLATERAL
        1. 34.3.1. Property Types
        2. 34.3.2. Diversification
        3. 34.3.3. Geography
        4. 34.3.4. Measurement and Analysis of Diversification
        5. 34.3.5. Prepayments
      4. 34.4. STRUCTURAL NUANCES OF CMBSs
        1. 34.4.1. ARD Loans
        2. 34.4.2. Appraisal Reduction
        3. 34.4.3. Servicing and Conflicts of Interest
        4. 34.4.4. Interest Shortfalls and Recovery of Advances
        5. 34.4.5. A/B Notes and Mezzanine Loans
        6. 34.4.6. Additional Debt
      5. 34.5. SUMMARY
      6. 34.6. REFERENCES
    19. 35. Nonmortgage Asset-Backed Securities
      1. 35.1. CREDIT CARD RECEIVABLE-BACKED SECURITIES
        1. 35.1.1. Cash Flow
        2. 35.1.2. Performance of the Portfolio of Receivables
      2. 35.2. EARLY AMORTIZATION TRIGGERS
      3. 35.3. AUTO LOAN-BACKED SECURITIES
        1. 35.3.1. Cash Flows and Prepayments
        2. 35.3.2. Structures
      4. 35.4. STUDENT LOAN ASSET-BACKED SECURITIES
        1. 35.4.1. Collateral
        2. 35.4.2. Structures
      5. 35.5. SBA LOAN-BACKED SECURITIES
      6. 35.6. AIRCRAFT LEASE-BACKED SECURITIES
        1. 35.6.1. Aircraft Leasing
        2. 35.6.2. Servicing
        3. 35.6.3. Defaults
        4. 35.6.4. Enhancement Levels
      7. 35.7. FRANCHISE LOAN-BACKED SECURITIES
        1. 35.7.1. Security Characteristics
        2. 35.7.2. Major Sectors
        3. 35.7.3. Risk Considerations
      8. 35.8. RATE REDUCTION BONDS
        1. 35.8.1. Structure
        2. 35.8.2. Enhancement Levels
        3. 35.8.3. Unique Risks
      9. 35.9. SUMMARY
      10. 35.10. REFERENCES
    20. 36. Synthetic Asset-Backed Securities
      1. 36.1. CREDIT DERIVATIVES AND ABS MARKETS
      2. 36.2. PAY-AS-YOU-GO CDS
      3. 36.3. MARKET CONSIDERATIONS
      4. 36.4. ABS CDS AND CASH BOND VALUATION
      5. 36.5. SUMMARY
      6. 36.6. REFERENCES
    21. 37. Catastrophe Bonds
      1. 37.1. CATASTROPHE RISK MANAGEMENT
        1. 37.1.1. Traditional Reinsurance
        2. 37.1.2. Catastrophe Risk Layers
      2. 37.2. CAPITAL MARKET DEVELOPMENTS
        1. 37.2.1. Government Initiatives
        2. 37.2.2. Securitization of Catastrophe Risk
      3. 37.3. STRUCTURE OF CATASTROPHE BONDS
      4. 37.4. RATING AGENCY AND MODELING CONSIDERATIONS
        1. 37.4.1. An Uncorrelated Asset Class
      5. 37.5. MARKET DEVELOPMENTS
      6. 37.6. MARKET PARTICIPANTS
      7. 37.7. SUMMARY
      8. 37.8. ACKNOWLEDGMENTS
      9. 37.9. REFERENCES
    22. 38. Collateralized Debt Obligations
      1. 38.1. UNDERSTANDING CDOs
        1. 38.1.1. Four Attributes of a CDO
        2. 38.1.2. A CDO Structural Matrix
        3. 38.1.3. Parties to a CDO
      2. 38.2. CASH FLOW CDOs
        1. 38.2.1. Distribution of Cash Flows
        2. 38.2.2. Restrictions on Management: Safety Nets
        3. 38.2.3. Credit Ratings
        4. 38.2.4. Call Provisions in CDO Transactions
      3. 38.3. SYNTHETIC ARBITRAGE CDOs
        1. 38.3.1. Full-Capital Structure Synthetic Arbitrage CDOs
        2. 38.3.2. Single-Tranche CDOs
        3. 38.3.3. Standard Tranches of CDS Indices
      4. 38.4. SUMMARY
      5. 38.5. REFERENCES
    23. 39. Interest Rate Futures and Forward Rate Agreements
      1. 39.1. SHORT-TERM INTEREST RATE FUTURES CONTRACTS
        1. 39.1.1. Eurodollar Futures
        2. 39.1.2. Fed Funds Futures Contract
      2. 39.2. LONG-TERM INTEREST RATE FUTURES CONTRACTS
        1. 39.2.1. Treasury Bond Futures
        2. 39.2.2. Swap Futures Contracts
        3. 39.2.3. 10-Year Municipal Note Index Futures Contract
      3. 39.3. FORWARD RATE AGREEMENTS
        1. 39.3.1. FRA Basics
        2. 39.3.2. FRA Mechanics
      4. 39.4. SUMMARY
      5. 39.5. REFERENCES
    24. 40. Interest Rate Swaps
      1. 40.1. THE PLAIN VANILLA SWAP
        1. 40.1.1. Swap Payments versus Cash Flows
        2. 40.1.2. Swap Quote Conventions
        3. 40.1.3. Entering Into a Swap and Counterparty Risk
      2. 40.2. RISK/RETURN CHARACTERISTICS OF AN INTEREST RATE SWAP
      3. 40.3. INTERPRETING A SWAP POSITION
        1. 40.3.1. Package of Futures (Forward) Contracts
        2. 40.3.2. Package of Cash Market Instruments
      4. 40.4. DESCRIBING THE COUNTERPARTIES TO A SWAP
      5. 40.5. BEYOND THE PLAIN VANILLA SWAP
      6. 40.6. SUMMARY
      7. 40.7. REFERENCES
    25. 41. Interest Rate Options and Related Products
      1. 41.1. BASIC OPTION CONTRACT
      2. 41.2. EXCHANGE-TRADED VERSUS OTC OPTIONS
      3. 41.3. FUTURES OPTIONS
      4. 41.4. OVER-THE-COUNTER INTEREST RATE OPTIONS
        1. 41.4.1. Options on a Specific Security
        2. 41.4.2. Spread Options
      5. 41.5. COMPOUND OPTIONS
      6. 41.6. CAPS AND FLOORS
        1. 41.6.1. Caps
        2. 41.6.2. Floors
        3. 41.6.3. Collars
        4. 41.6.4. Risk and Return Characteristics
      7. 41.7. SUMMARY
      8. 41.8. REFERENCES
    26. 42. Introduction to Credit Derivatives
      1. 42.1. DERIVATIVES: THE BUILDING BLOCK OF CREDIT DERIVATIVES
      2. 42.2. SECURITIZATION: THE OTHER BUILDING BLOCK
      3. 42.3. MEANING OF CREDIT DERIVATIVES
        1. 42.3.1. Quick Guide to Basic Jargon
        2. 42.3.2. Synthetic Lending
        3. 42.3.3. Motivations of the Parties
      4. 42.4. ELEMENTS OF A CREDIT DERIVATIVE
        1. 42.4.1. Bilateral Deals and Capital Market Deals
        2. 42.4.2. Reference Asset or Portfolio
        3. 42.4.3. Structured Portfolio Trade
        4. 42.4.4. Basket Trades
        5. 42.4.5. Index-Based Credit Derivative Trades
        6. 42.4.6. Protection Buyer
        7. 42.4.7. Protection Seller
        8. 42.4.8. Funded and Unfunded Credit Derivatives
        9. 42.4.9. Credit Event
        10. 42.4.10. Notional Value
        11. 42.4.11. Premium
        12. 42.4.12. Tenure
        13. 42.4.13. Loss Computation
        14. 42.4.14. Threshold Risk or Loss Materiality Provisions
        15. 42.4.15. Cash and Physical Settlement
      5. 42.5. QUICK INTRODUCTION TO THE TYPES OF CREDIT DERIVATIVES
        1. 42.5.1. Credit Default Swap
        2. 42.5.2. Total Return Swap
        3. 42.5.3. Credit-Linked Notes
        4. 42.5.4. Credit Spread Options
      6. 42.6. CREDIT DERIVATIVES AND TRADITIONAL FINANCIAL GUARANTEE PRODUCTS
        1. 42.6.1. Credit Derivatives and Guarantees
      7. 42.7. CREDIT DERIVATIVES AND SECURITIZATION
      8. 42.8. SUMMARY
      9. 42.9. REFERENCES
    27. 43. Fixed Income Total Return Swaps
      1. 43.1. ECONOMICS OF A TOTAL RETURN SWAP
        1. 43.1.1. Total Return Swap Compared to an Interest Rate Swap
        2. 43.1.2. Illustration
      2. 43.2. APPLICATIONS OF A TOTAL RETURN SWAP
        1. 43.2.1. Creating a Synthetic Repo
        2. 43.2.2. Use in the Bank Loan Market
      3. 43.3. TOTAL RETURN INDEX SWAPS
        1. 43.3.1. Indexing a Credit Spread Sector by an Active Asset Manager
        2. 43.3.2. Active Strategies
        3. 43.3.3. Risk Control
      4. 43.4. SUMMARY
      5. 43.5. REFERENCES
    28. 44. Bond Market Transparency
      1. 44.1. BENEFITS OF AN OPEN SYSTEM
      2. 44.2. DISPARITY OF MARKET PRICING
        1. 44.2.1. U.S. Treasury and Agency Securities
        2. 44.2.2. Corporate Bonds (Investment and Non-Investment Grade)
        3. 44.2.3. Mortgage-Related Securities
        4. 44.2.4. Municipals
        5. 44.2.5. Other
      3. 44.3. BUYER BEWARE: ALL PRICES ARE NOT CREATED EQUAL
        1. 44.3.1. Market Indications
        2. 44.3.2. Matrix Pricing
        3. 44.3.3. Option-Adjusted Spread Calculation
      4. 44.4. THE DEBATE ON PRICE TRANSPARENCY
        1. 44.4.1. Arguments in Favor of Price Transparency
        2. 44.4.2. Arguments Opposed to Price Transparency
      5. 44.5. A RAPIDLY EVOLVING MARKET
        1. 44.5.1. Execution Reporting
        2. 44.5.2. Best Execution
        3. 44.5.3. Trading Styles
      6. 44.6. SUMMARY
      7. 44.7. REFERENCES
    29. 45. Bond Spreads and Relative Value
      1. 45.1. BOND SPREADS
        1. 45.1.1. Swap Spread and Treasury Spread
        2. 45.1.2. Asset Swap Spread
        3. 45.1.3. Zero-Volatility Spread
      2. 45.2. THE ASSET SWAP CDS PRICE
        1. 45.2.1. Asset Swap Pricing
        2. 45.2.2. Asset Swap Pricing Example
        3. 45.2.3. Pricing Differentials
        4. 45.2.4. Cash-CDS Basis
      3. 45.3. SUMMARY
      4. 45.4. REFERENCES
    30. 46. The Determinants of the Swap Spread and Understanding the LIBOR Term Premium
      1. 46.1. DETERMINANTS OF THE SWAP SPREAD
        1. 46.1.1. Determinants of the Spread
      2. 46.2. MAGNITUDE OF THE TERM PREMIUM
        1. 46.2.1. Illustration
      3. 46.3. OBSERVATION OF MACRO-LEVEL ECONOMIC AND POLITICAL FACTORS ON SWAP SPREADS
      4. 46.4. SUMMARY
      5. 46.5. REFERENCES
  9. 4. Real Estate
    1. 47. Real Estate Investment
      1. 47.1. REAL ESTATE MARKET
      2. 47.2. KEY CHARACTERISTICS OF REAL ESTATE
        1. 47.2.1. Debt-Equity Hybrid
        2. 47.2.2. Holding Value
      3. 47.3. REAL ESTATE INVESTMENT
        1. 47.3.1. Investment Characteristics of Each Quadrant
      4. 47.4. WHY REAL ESTATE?
        1. 47.4.1. Reduce Aggregate Portfolio Risk
        2. 47.4.2. Realize a High Absolute Rate of Return
        3. 47.4.3. Hedge Inflation
        4. 47.4.4. Reflect the Larger Investment Universe
        5. 47.4.5. Deliver High Cash Flows
      5. 47.5. SPECIAL TOPICS IN REAL ESTATE
        1. 47.5.1. Issue of International Investing
        2. 47.5.2. Issue of Leverage
        3. 47.5.3. Emerging Issue of Derivatives
      6. 47.6. RELATIONSHIPS ACROSS THE QUADRANTS: IS REAL ESTATE REAL ESTATE?
      7. 47.7. SUMMARY
      8. 47.8. REFERENCES
    2. 48. Investing in Commercial Real Estate for Individual Investors
      1. 48.1. IMPORTANCE OF LOCATION
      2. 48.2. IMPORTANCE OF DIVERSIFICATION
      3. 48.3. SPECIFIC ADVANTAGES TO INVESTING IN COMMERCIAL REAL ESTATE
        1. 48.3.1. Financial Leverage
        2. 48.3.2. Operating Leverage
        3. 48.3.3. Inflation Resistance
        4. 48.3.4. Tax Advantages
        5. 48.3.5. Investing in Real Estate Is Like Owning Your Own Business
        6. 48.3.6. Debt in an Inflationary World Is Good
        7. 48.3.7. Compounding Cash Flows
      4. 48.4. SPECIFIC DISADVANTAGES RELATING TO REAL ESTATE
        1. 48.4.1. Lack of Liquidity
        2. 48.4.2. Understanding of Financial Statements
        3. 48.4.3. Difficulties in Determining Property Value
        4. 48.4.4. Overextended Borrowing
        5. 48.4.5. Management Expertise Required
      5. 48.5. BUSINESS ORGANIZATIONAL FORM
        1. 48.5.1. Sole Proprietorship
        2. 48.5.2. General Partnership
        3. 48.5.3. Limited Partnership
        4. 48.5.4. Limited Liability Partnership
        5. 48.5.5. Limited Liability Limited Partnership
        6. 48.5.6. Registered Limited Liability Partnership
        7. 48.5.7. Limited Liability Company
        8. 48.5.8. C Corporation
        9. 48.5.9. Subchapter S Corporations
        10. 48.5.10. Closed Corporations
        11. 48.5.11. Professional Corporations
        12. 48.5.12. Professional Associations
        13. 48.5.13. Service Corporations
        14. 48.5.14. Multiple Forms
        15. 48.5.15. Franchiser or Franchisee
      6. 48.6. SUMMARY
      7. 48.7. REFERENCES
    3. 49. Types of Commercial Real Estate
      1. 49.1. APARTMENT COMPLEXES
        1. 49.1.1. Condominiums
      2. 49.2. TIMESHARES
      3. 49.3. UNDEVELOPED LAND
        1. 49.3.1. Raw Land
        2. 49.3.2. Developing Land
      4. 49.4. SELF-STORAGE FACILITIES
      5. 49.5. RESTAURANTS
      6. 49.6. SHOPPING CENTERS
        1. 49.6.1. Types of Shopping Centers
      7. 49.7. RECREATIONAL FACILITIES
      8. 49.8. OFFICE BUILDINGS
        1. 49.8.1. Types of Office Buildings
      9. 49.9. PARKING LOTS
        1. 49.9.1. Parking Market Segments
      10. 49.10. HOTELS AND MOTELS
      11. 49.11. INDUSTRIAL SITES
      12. 49.12. SUMMARY
      13. 49.13. REFERENCES
    4. 50. Commercial Real Estate Loans and Securities
      1. 50.1. LOAN ORIGINATION
        1. 50.1.1. Underwriting a Loan
        2. 50.1.2. The Master and Special Servicers
      2. 50.2. PROPERTY-LEVEL LOANS
        1. 50.2.1. First-Lien Commercial Mortgage Loans
        2. 50.2.2. Mezzanine Loans
        3. 50.2.3. Other CRE Loans
      3. 50.3. COMMERCIAL MORTGAGE-BACKED SECURITIES
        1. 50.3.1. Prepayment and Extension Risk
        2. 50.3.2. Interest Shortfalls
        3. 50.3.3. Types of CMBS Deals
      4. 50.4. REIT SECURITIES
      5. 50.5. EVALUATING CREL AND CMBS
        1. 50.5.1. Property-Level Analysis
        2. 50.5.2. Loan-Level Analysis
        3. 50.5.3. CMBS Bond-Level Analysis
      6. 50.6. SUMMARY
      7. 50.7. REFERENCES
    5. 51. Commercial Real Estate Derivatives
      1. 51.1. USES AND USERS OF COMMERCIAL REAL ESTATE DERIVATIVES
        1. 51.1.1. Exposure to the Real Estate Asset Class
        2. 51.1.2. Harvesting Alpha
        3. 51.1.3. Portfolio Balancing
        4. 51.1.4. Relative Value Investing
        5. 51.1.5. Efficient Leverage
      2. 51.2. EXAMPLE: FORWARD CONTRACT
      3. 51.3. HARVESTING ALPHA EXAMPLE
      4. 51.4. CAPITAL RETURN SWAP EXAMPLE
      5. 51.5. REAL ESTATE INDICES
      6. 51.6. INCOME AND CAPITAL RETURNS
      7. 51.7. APPRAISAL-BASED INDICES
      8. 51.8. TRANSACTIONS-BASED INDICES
      9. 51.9. SUMMARY
      10. 51.10. APPENDIX: NUMERICAL EXAMPLE OF HOW THE REPEAT-SALES INDEX WORKS
      11. 51.11. REFERENCES
  10. 5. Alternative Investments
    1. 52. Alternative Asset Classes
      1. 52.1. SUPER ASSET CLASSES
        1. 52.1.1. Capital Assets
        2. 52.1.2. Assets that Can be Used as Economic Inputs
        3. 52.1.3. Assets that Are a Store of Value
        4. 52.1.4. Real Estate
      2. 52.2. ASSET ALLOCATION
        1. 52.2.1. Asset Classes and Asset Allocation
        2. 52.2.2. Strategic versus Tactical Allocations
        3. 52.2.3. Efficient versus Inefficient Asset Classes
        4. 52.2.4. Constrained versus Unconstrained Investing
        5. 52.2.5. Asset Location versus Trading Strategy
        6. 52.2.6. Alternative Beta and the Efficient Frontier
        7. 52.2.7. Asset Class Risk Premiums versus Trading Strategy Risk Premiums
      3. 52.3. SUMMARY
      4. 52.4. REFERENCES
    2. 53. Hedge Funds
      1. 53.1. HEDGE FUNDS VERSUS MUTUAL FUNDS
      2. 53.2. CATEGORIES OF HEDGE FUNDS
      3. 53.3. HEDGE FUND STRATEGIES
        1. 53.3.1. Market Direction Hedge Funds
        2. 53.3.2. Corporate Restructuring Hedge Funds
        3. 53.3.3. Convergence Trading Hedge Funds
        4. 53.3.4. Opportunistic Hedge Fund Strategies
      4. 53.4. SHOULD HEDGE FUNDS BE PART OF AN INVESTMENT PROGRAM?
      5. 53.5. IS HEDGE FUND PERFORMANCE PERSISTENT?
      6. 53.6. A HEDGE FUND INVESTMENT STRATEGY
        1. 53.6.1. Opportunistic Hedge Fund Investing
        2. 53.6.2. Hedge Fund of Funds
        3. 53.6.3. Absolute Return
      7. 53.7. SELECTING A HEDGE FUND MANAGER
        1. 53.7.1. Investment Objective
        2. 53.7.2. Investment Process
        3. 53.7.3. What Makes the Hedge Fund Manager so Smart?
      8. 53.8. SUMMARY
      9. 53.9. REFERENCES
    3. 54. Introduction to Venture Capital
      1. 54.1. ROLE OF A VENTURE CAPITALIST
        1. 54.1.1. Relationship of the Venture Capitalist to Her Investors
        2. 54.1.2. Restrictions on the Management of the Venture Capital Fund
        3. 54.1.3. Restrictions on the Activities of the General Partner
        4. 54.1.4. Restrictions on the Type of Investments
        5. 54.1.5. Venture Capital Fees
      2. 54.2. THE BUSINESS PLAN
        1. 54.2.1. Executive Summary
        2. 54.2.2. The Market
        3. 54.2.3. The Product or Service
        4. 54.2.4. Intellectual Property Rights
        5. 54.2.5. The Start-up Management Team
        6. 54.2.6. Operations and Prior Operating History
        7. 54.2.7. Financial Projections
        8. 54.2.8. Amount of Financing
        9. 54.2.9. Exit Plan
      3. 54.3. CURRENT STRUCTURE OF THE VENTURE CAPITAL INDUSTRY
        1. 54.3.1. Sources and Uses of Venture Capital Financing
        2. 54.3.2. Venture Capital Investment Vehicles
        3. 54.3.3. Life Cycle of a Venture Capital Fund
        4. 54.3.4. Specialization within the Venture Capital Industry
      4. 54.4. STAGE OF FINANCING
        1. 54.4.1. Angel Investing
        2. 54.4.2. Seed Capital
        3. 54.4.3. Early-Stage Venture Capital
        4. 54.4.4. Late-Stage/Expansion Venture Capital
        5. 54.4.5. Mezzanine Stage
        6. 54.4.6. J Curve for a Start-up Company
      5. 54.5. SUMMARY
      6. 54.6. REFERENCES
    4. 55. Assessing Hedge Fund Investment Risk in Common Hedge Fund Strategies
      1. 55.1. FIXED INCOME STRATEGIES
        1. 55.1.1. Government Bond Arbitrage
        2. 55.1.2. Mortgage-Backed Security Arbitrage
        3. 55.1.3. Corporate Bond Arbitrage
        4. 55.1.4. Emerging Markets
      2. 55.2. EVENT-DRIVEN STRATEGIES
        1. 55.2.1. Capital Structure Arbitrage
        2. 55.2.2. Distressed Securities
        3. 55.2.3. Merger Arbitrage
      3. 55.3. EQUITY STRATEGIES
        1. 55.3.1. Long/Short Equity
        2. 55.3.2. Multistrategy
        3. 55.3.3. Equity Market Neutral
        4. 55.3.4. Convertible Arbitrage
      4. 55.4. SUMMARY
      5. 55.5. ACKNOWLEDGMENTS
      6. 55.6. REFERENCES
    5. 56. Diversify a Portfolio with Tangible Commodities
      1. 56.1. THE BENEFITS OF TANGIBLE COMMODITIES
        1. 56.1.1. The Historical Returns of Commodities Are Similar to Those of Equities
        2. 56.1.2. Returns of Commodities Are Not Correlated with Those of Equities and Bonds
        3. 56.1.3. Add Commodities to Your Portfolio for Increased Risk-Adjusted Return
        4. 56.1.4. Commodities Can Protect a Portfolio during Periods of Uncertainty
      2. 56.2. HOW TO GET COMMODITY EXPOSURE
      3. 56.3. SUMMARY
      4. 56.4. REFERENCES
    6. 57. The Fundamentals of Commodity Investments
      1. 57.1. MARKET PARTICIPANTS
      2. 57.2. COMMODITY SECTORS
      3. 57.3. COMMODITIES AS AN ASSET CLASS OF THEIR OWN
        1. 57.3.1. Prospects for Commodity Market Participation
        2. 57.3.2. Buying the Physical Good
        3. 57.3.3. Commodity Stocks
        4. 57.3.4. Commodity Funds
        5. 57.3.5. Commodity Futures Indices
        6. 57.3.6. Commodity Futures
      4. 57.4. COMMODITY EXCHANGES
      5. 57.5. RISK AND PERFORMANCE CHARACTERISTICS
      6. 57.6. PORTFOLIO OPTIMIZATION WITH COMMODITIES
      7. 57.7. SUMMARY
      8. 57.8. REFERENCES
    7. 58. Art Finance
      1. 58.1. ART MARKET INDICES
      2. 58.2. ART AS AN ALTERNATIVE ASSET CLASS
      3. 58.3. ART FUNDS
      4. 58.4. SUMMARY
      5. 58.5. REFERENCES
    8. 59. Investing in Life Settlements
      1. 59.1. INVESTMENT CHARACTERISTICS
        1. 59.1.1. Higher Expected IRR/Longer Duration
        2. 59.1.2. Low Correlation to Other Asset Classes
        3. 59.1.3. High Credit Quality
      2. 59.2. VALUATION
        1. 59.2.1. Variance Estimates
      3. 59.3. ELEMENTARY LIFE INSURANCE
        1. 59.3.1. Elementary Life Annuity
        2. 59.3.2. Forward Values
        3. 59.3.3. Elementary-Level Premium
        4. 59.3.4. Substandard Health
        5. 59.3.5. Elementary Life-Settlement Valuation
      4. 59.4. PORTFOLIO OF LIFE SETTLEMENTS
      5. 59.5. SUMMARY
      6. 59.6. REFERENCES
  11. 6. Investment Companies, ETFs, and Life Insurance Products
    1. 60. Investment Companies
      1. 60.1. TYPES OF INVESTMENT COMPANIES
        1. 60.1.1. Open-End Funds (Mutual Funds)
        2. 60.1.2. Closed-End Funds
        3. 60.1.3. Unit Trusts
      2. 60.2. FUND SALES CHARGES AND ANNUAL OPERATING EXPENSES
        1. 60.2.1. Sales Charges or Loads
        2. 60.2.2. Annual Operating Expenses (Expense Ratio)
        3. 60.2.3. Multiple Share Classes
      3. 60.3. ADVANTAGES OF INVESTING IN MUTUAL FUNDS
      4. 60.4. TYPES OF FUNDS BY INVESTMENT OBJECTIVE
      5. 60.5. THE CONCEPT OF A FAMILY OF FUNDS
      6. 60.6. TAXATION OF MUTUAL FUNDS
      7. 60.7. REGULATION OF FUNDS
      8. 60.8. STRUCTURE OF A FUND
      9. 60.9. RECENT CHANGES IN THE MUTUAL FUND INDUSTRY
        1. 60.9.1. Distribution Channels
        2. 60.9.2. "Mix and Match" (Open Architecture)
      10. 60.10. MUTUAL FUNDS VERSUS EXCHANGE-TRADED FUNDS
      11. 60.11. REFERENCES
    2. 61. Exchange-Traded Funds
      1. 61.1. THE HISTORY AND STRUCTURE OF ETFs AND SOME COMPETITORS
        1. 61.1.1. Portfolio Trading
        2. 61.1.2. Toronto Stock Exchange Index Participations (TIPs)
        3. 61.1.3. Standard & Poor's Depository Receipts (SPDRs)
        4. 61.1.4. World Equity Benchmark Shares (WEBS)—Renamed iShares MSCI Series
        5. 61.1.5. ETFs AND OTHER TRADABLE BASKET PRODUCTS
        6. 61.1.6. Closed-End Funds
        7. 61.1.7. "Open" Exchange-Traded Funds
        8. 61.1.8. Holding Company Depository Receipts (HOLDRs)
        9. 61.1.9. Folios
        10. 61.1.10. Exchange-Traded Notes (ETNs) and Other Structured Products
        11. 61.1.11. A Side-by-Side Comparison of Tradable Basket Products
        12. 61.1.12. Improving ETFs
      2. 61.2. SUMMARY
      3. 61.3. REFERENCES
    3. 62. Investment-Oriented Life Insurance
      1. 62.1. INSURANCE
        1. 62.1.1. Conceptual Issues in Risk Management
        2. 62.1.2. Investment-Oriented Life Insurance Products
        3. 62.1.3. The Nature of Insurance Companies
        4. 62.1.4. General Account versus Separate Account Products
        5. 62.1.5. Overview of Cash Value Whole Life Insurance
        6. 62.1.6. Taxability of Life Insurance
      2. 62.2. INVESTMENT-ORIENTED LIFE INSURANCE
        1. 62.2.1. Cash Value Life Insurance
        2. 62.2.2. Uses of Life Insurance
        3. 62.2.3. Annuities
      3. 62.3. SUMMARY
      4. 62.4. REFERENCES
    4. 63. Stable Value Investment Options for Defined Contribution Plans
      1. 63.1. THE NEED FOR STABLE VALUE INVESTING
        1. 63.1.1. Participant Demand for Safety
        2. 63.1.2. Plan Design
        3. 63.1.3. Returns
        4. 63.1.4. Historical Legacy
      2. 63.2. TYPES OF STABLE VALUE FUNDING VEHICLES
        1. 63.2.1. Portfolio Rate General Account
        2. 63.2.2. GICs
        3. 63.2.3. Bank Investment Contracts
        4. 63.2.4. Separate Account Products
        5. 63.2.5. Synthetic GICs
        6. 63.2.6. Global Wraps
        7. 63.2.7. Pooled Funds
        8. 63.2.8. Individual CD-Type Products
        9. 63.2.9. Bond Mutual Funds and Other Alternatives
      3. 63.3. BUYERS OF STABLE VALUE PRODUCTS
        1. 63.3.1. Book-Value Accounting
        2. 63.3.2. Types of Buyers
      4. 63.4. COMMON FEATURES OF STABLE VALUE PRODUCTS
        1. 63.4.1. Interest Crediting
        2. 63.4.2. Deposit and Withdrawal Limitations
        3. 63.4.3. Transfers
        4. 63.4.4. Withdrawal Hierarchy
        5. 63.4.5. Need for Exit Provisions
        6. 63.4.6. Market Value Adjustment
        7. 63.4.7. Book Value Installments
        8. 63.4.8. Transfer-in-Kind
        9. 63.4.9. Annuitization
      5. 63.5. CONTRACT ISSUANCE
        1. 63.5.1. Annuity
        2. 63.5.2. Trust
        3. 63.5.3. Funding Agreement
      6. 63.6. PLAN SPONSOR MANAGEMENT ISSUES
        1. 63.6.1. Diversification and Credit Risk
        2. 63.6.2. Economy of Purchase
        3. 63.6.3. Withdrawal Provisions—Participant Benefits
        4. 63.6.4. Withdrawal Provisions—Plan Sponsor
        5. 63.6.5. Further Considerations at Time of Transfer
        6. 63.6.6. The Trade-off among Rate, Liquidity, and Quality
        7. 63.6.7. Book Value Accounting
      7. 63.7. ISSUER CONSIDERATIONS
        1. 63.7.1. Fully Guaranteed Contracts
        2. 63.7.2. Actively Managed Assets
        3. 63.7.3. Pooled Funds
      8. 63.8. ASSET/LIABILITY MANAGEMENT
        1. 63.8.1. Fully Guaranteed Products
        2. 63.8.2. Actively Managed Products
        3. 63.8.3. Pooled Funds
      9. 63.9. UNDERWRITING
      10. 63.10. LEGAL AND REGULATORY ISSUES
      11. 63.11. SOME HISTORICAL LESSONS LEARNED
        1. 63.11.1. Fully Guaranteed Products
        2. 63.11.2. Actively Managed Products
        3. 63.11.3. Pooled Funds
      12. 63.12. PROS AND CONS OF DIFFERENT STABLE VALUE OPTION FUNDING VEHICLES
      13. 63.13. NEW DEVELOPMENTS IN PRINCIPAL-PROTECTED PRODUCTS
      14. 63.14. SUMMARY
      15. 63.15. REFERENCES
  12. 7. Foreign Exchange
    1. 64. An Introduction to Spot Foreign Exchange
      1. 64.1. BRIEF HISTORY
      2. 64.2. FOREIGN EXCHANGE EXPOSURE
      3. 64.3. BASIC USES
      4. 64.4. CHARACTERISTICS
      5. 64.5. MAJOR PARTICIPANTS AND THEIR ROLES
      6. 64.6. SPOT FOREIGN EXCHANGE
        1. 64.6.1. Spot and Reciprocal Rates
        2. 64.6.2. European and American Terms
      7. 64.7. SPOT TRANSACTIONS
        1. 64.7.1. Bid-Offer Spreads
        2. 64.7.2. Reading Foreign Exchange Rates
        3. 64.7.3. Big Figures
        4. 64.7.4. Spread
        5. 64.7.5. Direct versus Brokered Dealing
      8. 64.8. CROSS RATES
      9. 64.9. PRICE DETERMINANTS
      10. 64.10. RISK CONSIDERATIONS
      11. 64.11. ASKING FOR A QUOTE
      12. 64.12. SUMMARY
      13. 64.13. REFERENCES
    2. 65. An Introduction to Foreign Exchange Derivatives
      1. 65.1. FOREIGN EXCHANGE FORWARD CONTRACTS
        1. 65.1.1. Definitions
        2. 65.1.2. Interest Rate Differentials
        3. 65.1.3. Periods
        4. 65.1.4. Premium or Discount
        5. 65.1.5. Calculations
        6. 65.1.6. Bids and Offers
        7. 65.1.7. To Add or Subtract
        8. 65.1.8. Forward Quotes
        9. 65.1.9. Forward Cross Rates
        10. 65.1.10. Risks Involved
        11. 65.1.11. Short-Dated Contracts
        12. 65.1.12. Long-Dated Contracts
        13. 65.1.13. Broken-Dated Contracts
        14. 65.1.14. Outright Forwards
      2. 65.2. NONDELIVERABLE FORWARDS
        1. 65.2.1. Fixing Methodology
        2. 65.2.2. How Quoted
        3. 65.2.3. Risk Management Tool
        4. 65.2.4. Availability
        5. 65.2.5. Typical Risks Encountered
        6. 65.2.6. Index-Linked Deposits
        7. 65.2.7. Summary of Characteristics
      3. 65.3. FOREIGN EXCHANGE SWAPS
        1. 65.3.1. Combinations
        2. 65.3.2. Uses
        3. 65.3.3. Formula
        4. 65.3.4. Uses of Swaps
        5. 65.3.5. Risks
      4. 65.4. CURRENCY SWAPS
        1. 65.4.1. Technique Involved
        2. 65.4.2. No Interest Payable
        3. 65.4.3. Flexibility
        4. 65.4.4. Liquid and Cost Effective
        5. 65.4.5. Exposure
        6. 65.4.6. Graphic Example
      5. 65.5. FOREIGN EXCHANGE FUTURES
        1. 65.5.1. Two-Sided Risk
        2. 65.5.2. Margin
        3. 65.5.3. Exchange Members
        4. 65.5.4. Clearing Corporation
        5. 65.5.5. Major Exchanges
        6. 65.5.6. Quoting Currency Futures
        7. 65.5.7. Ticks and Delivery Months
        8. 65.5.8. Contract Specifications
      6. 65.6. EXCHANGE FOR PHYSICAL
        1. 65.6.1. Example 1
        2. 65.6.2. Example 2
        3. 65.6.3. Point of the Exercise
        4. 65.6.4. Interbank versus Futures
      7. 65.7. SUMMARY
      8. 65.8. REFERENCES
    3. 66. Introduction to Foreign Exchange Options
      1. 66.1. FOREIGN EXCHANGE OPTIONS
        1. 66.1.1. Call Option
        2. 66.1.2. Put Option
        3. 66.1.3. Exchange-Traded Options versus Over-the-Counter Options
        4. 66.1.4. Applications of Foreign Exchange Options
        5. 66.1.5. Alternatives to Foreign Exchange Options
        6. 66.1.6. Parties and the Risks Involved
        7. 66.1.7. Currency or Dollar Call or Put Option?
        8. 66.1.8. Users of Foreign Exchange Options
        9. 66.1.9. Differences between Hedging and Speculation
        10. 66.1.10. American versus European
      2. 66.2. BASICS OF OPTION THEORY
        1. 66.2.1. In-, At-, or Out-of-the-Money
      3. 66.3. THE PREMIUM
      4. 66.4. OTHER CONSIDERATIONS
        1. 66.4.1. Pricing Theory
        2. 66.4.2. Market Conventions
        3. 66.4.3. Strike Price and Strike Selection
        4. 66.4.4. Live Price
        5. 66.4.5. Premium Conversions
        6. 66.4.6. Settlement and Exercise
        7. 66.4.7. Risks
      5. 66.5. SUMMARY
      6. 66.6. REFERENCES
  13. 8. Inflation-Hedging Products
    1. 67. Inflation-Linked Bonds
      1. 67.1. INFLATION, INVESTING, AND CONSUMPTION
      2. 67.2. INFLATION BOND BASICS: THEORY AND STRUCTURE
      3. 67.3. WHY INFLATION-LINKED BONDS?
        1. 67.3.1. Gauging Inflation Expectations and Preventing Policy Errors
        2. 67.3.2. Managing Inflation and Inflation Expectations
        3. 67.3.3. Liability Management
        4. 67.3.4. Risk Diversification
        5. 67.3.5. Active Management
      4. 67.4. BEHAVIOR OF INFLATION-LINKED BONDS
        1. 67.4.1. Return Decomposition
        2. 67.4.2. Saving the Inflation Risk Premium?
        3. 67.4.3. Low Volatility
        4. 67.4.4. Correlation
        5. 67.4.5. Triple Duration
        6. 67.4.6. Taxes
        7. 67.4.7. Asset Allocation and Portfolio Construction
        8. 67.4.8. Spending Policy
      5. 67.5. CONTINUING ISSUES
        1. 67.5.1. Why so Little Nonsovereign Issuance?
        2. 67.5.2. What Is the Future of the Inflation-Linked Bond Market?
      6. 67.6. SUMMARY
      7. 67.7. REFERENCES
    2. 68. Introduction to Inflation Derivatives
      1. 68.1. INFLATION DERIVATIVES MARKET
      2. 68.2. INFLATION BASICS
        1. 68.2.1. Inflation, Nominal Value, and Real Value
        2. 68.2.2. Real Bonds and Inflation-Linked Cash Flows: Ideal World
        3. 68.2.3. Real Bonds and Inflation-Linked Cash Flows: Practice
        4. 68.2.4. Breakeven Inflation
      3. 68.3. INFLATION PRODUCTS
        1. 68.3.1. Zero-Coupon Inflation Swap
        2. 68.3.2. Period-on-Period Inflation Swaps
        3. 68.3.3. Inflation Futures
      4. 68.4. ISDA INFLATION DERIVATIVES DOCUMENTATION
        1. 68.4.1. Delay of Publication
        2. 68.4.2. Successor Index
        3. 68.4.3. Cessation of Publication
        4. 68.4.4. Rebasing the Index
        5. 68.4.5. Material Modification Prior to Payment Date
        6. 68.4.6. Manifest Error in Publication
      5. 68.5. SUMMARY
      6. 68.6. REFERENCES
  14. 9. Inflation-Hedging Products
    1. 69. An Introduction to Securities Lending
      1. 69.1. WHAT IS SECURITIES LENDING?
        1. 69.1.1. Different Types of Securities Loan Transaction
        2. 69.1.2. Other Transaction Types
      2. 69.2. LENDERS AND INTERMEDIARIES
        1. 69.2.1. Intermediaries
        2. 69.2.2. Principal Intermediaries
        3. 69.2.3. Beneficial Owners
      3. 69.3. THE BORROWING MOTIVATION
        1. 69.3.1. Borrowing to Cover Short Positions
      4. 69.4. MARKET MECHANICS
        1. 69.4.1. Loan Negotiation
        2. 69.4.2. Confirmations
        3. 69.4.3. Term of Loan, and Selling Securities While on Loan
        4. 69.4.4. Term Trades—Fixed or Indicative?
        5. 69.4.5. Putting Securities "On Hold"
        6. 69.4.6. Settlements
        7. 69.4.7. Termination of the Loan
        8. 69.4.8. Redelivery, Failed Trades, and Legal Remedies
      5. 69.5. FINANCIAL RISKS AND RISK MANAGEMENT
        1. 69.5.1. When Taking Cash as Collateral
        2. 69.5.2. When Taking Other Securities as Collateral
      6. 69.6. SUMMARY
      7. 69.7. ACKNOWLEDGMENTS
      8. 69.8. REFERENCES
    2. 70. Mechanics of the Equity Lending Market
      1. 70.1. THE LENDING PROCESS
      2. 70.2. LENDERS
        1. 70.2.1. Lender's Rights
        2. 70.2.2. Lender's Risks
      3. 70.3. BORROWERS
      4. 70.4. THE DETERMINANTS OF REBATE RATES
      5. 70.5. SUMMARY
      6. 70.6. REFERENCES
    3. 71. Securities Lending, Liquidity, and Capital Market-Based Finance
      1. 71.1. The great_transition_the_rise_of_CAPITAL_MARKET-BASED_FINANCE
      2. 71.2. FINANCIAL COMPLEXITY AND INTENSIFICATION
      3. 71.3. THE CENTRAL ROLE OF LIQUIDITY
        1. 71.3.1. Evolution of the U.S. Securities Lending Market
        2. 71.3.2. Securities Lending: Key to Market Liquidity
        3. 71.3.3. How Securities Lending Finances Liquidity
        4. 71.3.4. Recognizing Securities Lending's Key Roles
        5. 71.3.5. Repo and Securities Lending
      4. 71.4. THE EMERGING OFFICIAL CONSENSUS: FOSTERING CAPITAL MARKETS AND SECURITIES LENDING
      5. 71.5. SUMMARY
      6. 71.6. REFERENCES
    4. 72. Repurchase Agreements and Dollar Rolls
      1. 72.1. REPURCHASE AGREEMENTS
        1. 72.1.1. The Basics
        2. 72.1.2. Credit Risks
        3. 72.1.3. Determinants of the Repo Rate
        4. 72.1.4. Special Collateral and Arbitrage
        5. 72.1.5. Participants in the Market
        6. 72.1.6. Repo/Reverse to Maturity
        7. 72.1.7. Buy/Sell-Back
        8. 72.1.8. Repo Market Structures
        9. 72.1.9. LIBOR Financed Treasury Repo
      2. 72.2. DOLLAR ROLLS
        1. 72.2.1. Background Information on Agency Pass-throughs
        2. 72.2.2. Determination of the Financing Cost
        3. 72.2.3. Illustrations of Dollar Roll Agreements
        4. 72.2.4. Risks in a Dollar Roll from the Investor's Perspective
      3. 72.3. SUMMARY
      4. 72.4. REFERENCES