Financial Times
Guide to Investing, 2nd edition
The Definitive Companion to
Investment & the Financial Markets

By Glen Arnold
Pearson Education
April 2010
ISBN: 9780273723745
584 Pages, Illustrated
$72.50 Paper original

The Financial Times Guide to Investingis the definitive introduction to the art of successful stock market investing. Beginning with the very basics of why companies need investors and explaining what investors do, Glen Arnold takes you through the practicalities of buying and selling shares. He describes different types of investment vehicles and advises you how you can be successful at picking companies, understanding their accounts, managing a sophisticated portfolio, measuring performance and risk and setting up an investment club.  

The second edition of this bestselling introduction to investing explains how the financial markets operate, shows you what you need to know to be successful and encourages you to follow and act on your own judgements.  Thoroughly updated to help you invest with skill and confidence, new sections include:

Investing can be profitable and fun and The Financial Times Guide to Investing 2nd edition, explains step-by-step both the essentials of investing as well as describing how the financial markets really work. It details the practicalities of investing, such as how to go about buying shares and describes the variety of financial securities you can buy, from bonds and unit trusts through to exchange traded funds.  

Exploding the myths that only the wealthy can afford to buy and sell shares and showing you why you can be just as successful trading on your own as you would be by employing a fund manager, this authoritative guide book will help you build a profitable personal financial portfolio.


What’s new in the second edition


Chapter 1 What is investment?

Partnerships; Limited liability; Ordinary shares and extraordinary returns; Shareholder rights; A money-making machine; Dividends and retained earnings; What if I want to sell?; Primary and secondary markets; Bonds; Capital structure; Stocks and shares; Rights issues; Financial institutions; Be proud to be a capitalist!; A note of warning: investment and speculation

Chapter 2 The rewards of investment

Becoming a millionaire; Simple and compound interest; How well have investors fared in the past?; The importance of income; International comparison; Equities versus gilts; What about risk?; Closing comment; Further reading

Chapter 3 Stock markets

What is a stock market?; Brokers and market makers; Pricing – good old supply and demand; A short history of the London Stock Exchange; ‘Big Bang’; The international scene; Variety of securities traded; The primary market; The secondary market; The Main Market(The Official List); The Alternative Investment Market; techMARK and the other MARKs; PLUS; Other trading facilities; Who owns UK shares?; The role of stock exchanges; Useful websites

Chapter 4 Buying and selling shares

Stockbroker services; Choosing a stockbroker; Finding prices; Getting the most out of websites; What happens when I buy or sell shares?; An alternative mechanism; A third trading system; What happens after dealing?; Ways of paying for your shares; Internet dealing; Transferring shares without brokers; Further reading


Chapter 5 Pooled investments

Unit trusts; Open-ended investment companies (OEICs); Exchange traded funds (ETFs); Investment trusts (investment companies); With-profits policies; Unit-linked policies; Insurance company bonds; Stock market-linked bonds; Money markets; Hedge funds; Fund supermarkets; Bringing home the significance of high fees

Chapter 6 Bonds

Gilts; Corporate bonds; Credit rating; High-yield (junk) bonds; Convertible bonds; Foreign bonds; Eurobonds

Chapter 7 Unusual share investment

Business angels; Venture capital and other private equity; Private equity categories; Overseas shares; Preference shares

Chapter 8 Options

What is a derivative?; What is an option?; Share options; Call option holders (call option buyers); Call option writers; An example of an option writing strategy; LIFFE share options; Put options; How to trade options; Using share options to reduce risk: hedging; Using options to reduce losses; Index options; Further reading; Websites  

Chapter 9 Futures

Marking to market and margins; Settlement; Buying and selling futures; Universal stock futures (single stock futures)

Chapter 10 Spread betting, contracts for difference and warrants

Spread betting; Contracts for difference; Warrants; Covered warrants; Further reading; Websites


Chapter 11 Company accounts

Oh no! Not numbers again!; How to obtain reports; The report and accounts; Profit and loss account; Balance sheet; Cash flow statement; Chairman’s statement; Chief executive’s review; Director’s report and business review; Auditors’ report; Five-year summary; Trading statement; Further reading

Chapter 12 Key investment ratios and measures

From the financial pages; Performance ratios and measures; Financial health ratios and measures; Forward-looking measures; Further reading

Chapter 13 Some of the tricks of the accounting trade

Goodwill; Fair value; What was our revenue again?; Exceptional items; Stock (inventory) valuation; Depreciation; Capitalisation; Off-balance-sheet items; Share (stock) options; Other tricks; Concluding comment; Further reading

Chapter 14 Analysing industries

The competitive floor; The five competitive forces; Threat of entry; Intensity of rivalry of existing companies; The threat from substitutes ;Buyer (customer) power; Supplier power; Industry evolution; Concluding comments; Further reading

Chapter 15 The competitive position of the firm

The TRRACK system; What makes resources extraordinary?; Investment in resources; Leveraging resources and over-exploiting them; Concluding comments; Further reading


Chapter 16 Companies issuing shares.

New issues; Rights issues; Other equity issues; Scrip issues; Share buy-backs and special dividends

Chapter 17 Taxation and investors

Stamp duty; Tax on dividends; Capital gains tax; Interest-bearing instruments; Inheritance tax, Individual savings accounts; Personal pensions; Enterprise Investment Scheme; Venture capital trusts; Offshore investment

Chapter 18 Mergers and takeovers

Merger motives; Financing mergers; The rules of the takeover game; Who wins from mergers?; Final comment: Why do mergers fail?; Further reading

Chapter 19 Investor protection

Protecting investors from wayward financial service professionals; Regulation of markets; Regulating of companies; Self-protection

Chapter 20 Measuring performance: indices and risk

Indices; Risk; Diversifiable risk; Websites; Further reading

Chapter 21 Investment clubs

How to set up a club; The unit valuation system; Bank account; Brokers; Tax; Further reading


List of useful Internet addresses



Glen Arnold is well know to us at Pearson and is the author of Corporate Financial Management, now in its 4th edition, Valuegrowth Investing and The Handbook of Corporate Finance.

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