Indeks : p.1053-66 ; bibliography : p. 1025-39 ; The text is addressed to both graduate and advanced undergraduate students who are looking for an in-depth discussion of investments and portfolio management. The presentation of the material is intended to be rigorous and empirical, without being overly quantitative. A proper discussion of the modern developments in investments and portfolio theory must be rigorous. The discussion of numerous empirical studies reflects the belief that is essential for alternative investment theories to be exposed to the real world and be judged on the basis of how well they help us understand and explain reality.