Instructor Manual - Fourteenth Edition Scott B. Smart Chad J. Zutte...

Instructor Manual by Robert Hartwig for Fundamentals of Investing Fourteenth Edition Scott B. Smart Chad J. Zutter NOTE: For Complete File, Download link at the end of this File 1 / 4

© 2020 Pearson Education, Inc.Chapter 1 The Investment Environment  Outline Learning Goals

• Investments and the Investment Process
• Attributes of Investments
• Securities or Property
• Direct or Indirect
• Debt, Equity, or Derivative Securities
• Low- or High-Risk Investments
• Short- or Long-Term Investments
• Domestic or Foreign
• The Structure of the Investment Process

Concepts in Review

II. Types of Investments

• Short-Term Investments
• Common Stock
• Fixed-Income Securities
• Bonds
• Convertible Securities
• Preferred Stock
• Mutual Funds
• Exchange-Traded Funds
• Hedge Funds
• Derivative Securities
• Options
• Futures
• Other Popular Investments

Concepts in Review

III. Making Your Investment Plan

• Writing an Investment Policy Statement
• Summarize your current situation
• Specify your investment goals
• Articulate your investment philosophy
• Set investment selection guidelines
• Assign responsibility for selecting and monitoring investments
• Considering Personal Taxes
• Basic Sources of Taxation
• Types of Income

NOTE: For Complete File, Download link at the end of this File 2 / 4

• Smart/Zutter • Fundamentals of Investing, Fourteenth Edition

© 2020 Pearson Education, Inc.

• Ordinary Income
• Capital Gains and Losses
• Investments and Taxes
• Tax-Advantaged Retirement Savings Plans
• Investing over the Life Cycle
• Investments over the Business Cycle

Concepts in Review

IV. Meeting Liquidity Needs with Short-Term Investments

• The Role of Short-Term Investments
• Interest on Short-Term Investments
• Risk Characteristics
• Advantages and Disadvantages of Short-Term Investments
• Common Short-Term Investments
• Investment Suitability

Concepts in Review

• Careers in Finance
• Commercial Banking
• Corporate Finance
• Financial Planning
• Insurance
• Investment Banking
• Investment Management
• Developing Skills for Your Career
• Critical Thinking
• Communication and Collaboration
• Financial Computing Skills

Concepts in Review Summary Key Terms and Concepts Discussion Questions Problems Case Problems 1.1 Investments or Golf?

1.2 Preparing Susan Bowen’s Investment Plan  Key Concepts

• The meaning of the term investment and the implications it has for individual investors
• Review the factors used to differentiate between different types of investments 3 / 4

Chapter 1 The Investment Environment 3 © 2020 Pearson Education, Inc.

• The importance of and basic steps involved in the investment process
• Popular types of investments including short-term investments, common stock, mutual

funds and exchange-traded funds, fixed-income securities such as bonds, preferred stock, and convertibles

• Derivative securities such as options and futures
• Other popular investments such as real estate, tangibles, and tax-advantaged investments
• Writing an investment plan
• Building a diversified portfolio consistent with investment goals
• Sources of taxation, types of taxable income, and the effect of taxes on the investor
• Developing an investment program that considers differing economic environments

and the life cycle

• The use of short-term securities in meeting liquidity needs
• The merits and suitability of various popular short-term investments, including deposit

accounts and money market securities  Overview This chapter provides an overview of the scope and content of the text.

• The term investment is defined, and the various investment opportunities available to

investors are classified by types.

• The structure of the investment process is examined. This section explains how the

marketplace brings together suppliers and demanders of investment funds.

• The key participants in the investment process—government, business, and individuals—are

described, as are institutional and individual investors.

• Returns are defined as rewards for investing. Returns to an investor take two forms—current

income and increased value of the investment over time. In this section, the instructor need only define return, since there will be another opportunity to develop the concept of return in Chapter 4; also, providing information about recent investment returns always engages students’ attention. In classrooms with Internet access, viewing charts of stock returns over the last month, year, 5 years, and recent changes in interest rates will be especially useful.

• Next, the following investments available to individual investors are discussed: short-term

investments common stock, fixed-income securities, mutual funds, exchange-traded funds, hedge funds, real estate, tangibles, tax-advantaged investments, and options and futures. The text describes their risk-return characteristics in a general way. The instructor may want to expand on the advantages and disadvantages of investing in each, although they will be treated in greater detail in subsequent chapters. It is vital for any investor to establish investment goals that are consistent with his or her overall financial objectives.

• Writing an investment plan involves summarizing one’s current situation, specifying

investment goals, articulating an investment philosophy, setting investment selection guidelines, and assigning responsibility for selecting and monitoring investments.

• Personal taxes are discussed in terms of types of income and tax rates. The investment

process is affected by current tax laws. Examples of tax shelters, especially tax-advantaged retirement vehicles, and tax planning are provided.

• Once investment goals are established, it is important to understand how the investment

process is affected by different economic environments. The chapter talks about types of investments such as stocks, bonds, and tangibles as they are affected by business cycles, interest rates, and inflation.

• / 4