This textbook presents the most essential principles of investments. Each subject in the text is dealt with from the standpoint of an individual “rational” investor who makes investment decisions under the efficient market conditions. In the textbook, the detailed discussion of the investment setting is deliberately omitted in order to concentrate on the analyses of basic securities (common stock, preferred stock, bonds) and alternative securities (forwards and futures, options, convertibles and warrants). On the other hand, the textbook is structured to reflect these well-known steps of the investment process: identification, valuation, selection of assets and forming the portfolio, monitoring and modifying. The chapters include solved problems, key terms, chapter-end questions and problems, and a “Reality Check” section where problems with real data and investment environment are formulated. Moreover, a list of suggested readings, a glossary, an index and solutions to the chapter-end questions and problems are appended to maximize the benefits from the book.