Fundamentals of Investing

Abstract

Fundamentals of Investing, Lawrence J. Gitman and Michael D. Joehnk, Seventh Edition, Reading, MA: Addison Wesley, 1999. In a perfect world, real estate instructors would offer specialized courses to cover all aspects of real estate. In practice, most academic institutions offer few real estate courses, and these are often electives. If a real estate course is required, it is a fundamentals course, and not much time is devoted to real estate investments. More commonly, because of good enrollment, an investments course is required while real estate investments is an elective (if it is offered at all). Therefore, it would not be uncommon for a real estate instructor teaching a standard undergraduate investments course to look for some coverage of real estate investments. After teaching investments for the past three years with three different textbooks, I can confidently state that finding the right textbook for an undergraduate class has been a challenge. The seventh edition of Fundamentals of Investing has been the latest book that I have used in my undergraduate Investments course. I became interested in this book as these authors also have a Personal Financial Planning textbook, which I had used some years ago. Based on my own experience with their Fundamentals of Investing textbook and positive feedback from students, I can highly recommend this textbook for a typical undergraduate course. The book is well written, the questions and problems are appropriate for the level of textbook and the supplemental materials are helpful. The book has seventeen chapters, which is more than enough material for a onesemester course. The focus of the textbook is on the individual investor rather than the institutional investor. Undergraduate students seem to relate to that perspective well. The book is divided into six parts: (1) The Investment Environment; (2) Investing in Common Stock; (3) Investing in Fixed-Income Securities; (4) Derivative Securities; (5) Other Popular Investment Vehicles; and (6) Investment Administration. The textbook is current (considering the lag in publishing) with most examples, tables and figures updated through late 1997 or mid-1998. Each chapter begins with a real-world situation, issue or company; in Chapter 14, Real Estate and Other Tangible Investments, it is about Starwood Lodging's holdings and REIT status. After each section in a chapter, the Concepts in Review tests the knowledge acquired by a student. Normally, each chapter has two or more Investing in Action vignettes, which offer real world insights. In Chapter 14, one vignette discusses evaluating REITs as an investment and the other vignette is an overview of collectibles as an investment. A chapter summary concludes each chapter. Discussion questions and problems are labeled by chapter section identification to help students find answers. A good assortment of end-of-chapter problems is provided. Most of these problems are linked to the software, but using the software is optional. The level of difficulty of the problems is compatible with the abilities of most undergraduate students. In fact, I have had students do independent studies, and they have been able to do the problems in the textbook on their own. The problems are often all similar in difficulty, and it would be beneficial to have more difficult problems available for students to practice. The difficulty level should be clearly indicated so the instructor can decide whether to assign such problems. One or two case problems are offered at the end of each chapter, and these are more like long problems than cases. Nonetheless, they are often very practical, and students seem to enjoy going over these in class. However, they are not sufficient in detail to make a complete lecture from them; the authors might consider augmenting them to make them complete lectures and then offering PowerPoint slides for class presentation. Home page exercises are the last assignments at the end of each chapter. …