This fifth edition has been more substantially changed than any previous revision of Investments : Analysis and Management. These changes take several forms. The most important and far-reaching change is the incorporation of Arbitrage Pricing Theory (APT), the law of one price, which froms the basis for arbitrage, is invoked in discussing bonds, stocks, options, futures, and international investing. The implications of APT are omnipresent.



The fifth edition also delves into option theory than previous editions. An improved presentation of binomial option pricing, the mechanics of creating a protective put in order to establish portfolio insurance, and an explanationof how to value common stock by treating it as a call option on a leveraged company are among the examples of new option theory material.