In this chapter, you will learn about the different types of traditional assets and alternative investments. You will be required to calculate treasury bill and bond yields, as well as, bond and common stock valuations. In addition, we will introduce hedge funds as a type of alternative investment and look at their past performance compared to other types of investments.

When you have completed this chapter, you should be able to:

• List the three traditional asset classes

• State a definition of alternative investments

• Identify different investments that fit within either the traditional asset classes
  or alternative investments

• Calculate treasury bill and bond yields

• Calculate bond and common stock valuations

• Explain the Black Scholes Option Pricing Model

• Describe the most common option strategies

• Define hedge funds and explain why they are considered alternative investments

• Understand how hedge funds have performed in the past