This core text provides an up-to-date and authoritative explanation of the analysis of financial markets from within the framework of modern finance theory. The author deals with the composition of financial markets; the analysis and valuation of securities traded in financial markets; the use of securities in constructing and managing portfolios and in contributing to portfolio performance; and the causes of failure in financial markets. In particular, attention is paid to new types of investment product, different portfolio management strategies, speculation, arbitrage and risk management strategies and financial market failure.