Principles of Corporate Finance 12th Edition Brealey Test Bank

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Product Details:

  • ISBN-10 ‏ : ‎ 1259692175
  • ISBN-13 ‏ : ‎ 978-1259692178
  • Author:  Stewart C. Myers, Richard A. Brealey

The integrated solutions for Brealey’s Principles of Corporate Finance have been specifically designed to help improve student performance, meaning that students are prepared for class and can successfully solve problems and analyse the results. Resources within Connect Finance provide unlimited opportunities for students to practice solving financial problems and apply what they’ve learned. Brealey’s world-leading content showing managers how to use financial theory to solve practical problems combined with a complete digital solution will help students achieve higher outcomes in the course.

 

Table of Content:

  1. Chapter1 Introduction to Corporate Finance
  2. 1-1 Corporate Investment and Financing Decisions
  3. Investment Decisions
  4. Financing Decisions
  5. What Is a Corporation?
  6. The Role of the Financial Manager
  7. 1-2 The Financial Goal of the Corporation
  8. Shareholders Want Managers to Maximize Market Value
  9. A Fundamental Result
  10. The Investment Trade-Off
  11. Should Managers Look After the Interests of Their Shareholders?
  12. Agency Problems and Corporate Governance
  13. 1-3 Preview of Coming Attractions
  14. SUMMARY
  15. PROBLEM SETS
  16. APPENDIX Why Maximizing Shareholder Value Makes Sense
  17. Chapter 2 How to Calculate Present Values
  18. 2-1 Future Values and Present Values
  19. Calculating Future Values
  20. Calculating Present Values
  21. Valuing an Investment Opportunity
  22. Net Present Value
  23. Risk and Present Value
  24. Present Values and Rates of Return
  25. Calculating Present Values When There Are Multiple Cash Flows
  26. The Opportunity Cost of Capital
  27. 2-2 Looking for Shortcuts—Perpetuities and Annuities
  28. How to Value Perpetuities
  29. How to Value Annuities
  30. Valuing Annuities Due
  31. Calculating Annual Payments
  32. Future Value of an Annuity
  33. 2-3 More Shortcuts—Growing Perpetuities and Annuities
  34. Growing Perpetuities
  35. Growing Annuities
  36. 2-4 How Interest Is Paid and Quoted
  37. Continuous Compounding
  38. SUMMARY
  39. PROBLEM SETS
  40. FINANCE ON THE WEB
  41. Chapter 3 Valuing Bonds
  42. 3–1 Using the Present Value Formula to Value Bonds
  43. A Short Trip to Paris to Value a Government Bond
  44. Back to the United States: Semiannual Coupons and Bond Prices
  45. 3-2 How Bond Prices Vary with Interest Rates
  46. Duration and Volatility
  47. 3-3 The Term Structure of Interest Rates
  48. Spot Rates, Bond Prices, and the Law of One Price
  49. Measuring the Term Structure
  50. Why the Discount Factor Declines as Futurity Increases—and aDigression on Money Machines
  51. 3-4 Explaining the Term Structure
  52. Expectations Theory of the Term Structure
  53. Introducing Risk
  54. Inflation and Term Structure
  55. 3-5 Real and Nominal Rates of Interest
  56. Indexed Bonds and the Real Rate of Interest
  57. What Determines the Real Rate of Interest?
  58. Inflation and Nominal Interest Rates
  59. 3-6 The Risk of Default
  60. Corporate Bonds and Default Risk
  61. Sovereign Bonds and Default Risk
  62. SUMMARY
  63. FURTHER READING
  64. PROBLEM SETS
  65. FINANCE ON THE WEB
  66. Chapter 4 The Value of Common Stocks
  67. 4-1 How Common Stocks Are Traded
  68. Trading Results for GE
  69. 4-2 How Common Stocks Are Valued
  70. Valuation by Comparables
  71. Stock Prices and Dividends
  72. 4-3 Estimating the Cost of Equity Capital
  73. Using the DCF Model to Set Gas and Electricity Prices
  74. Dangers Lurk in Constant-Growth Formulas
  75. 4-4 The Link Between Stock Price and Earnings per Share
  76. Calculating the Present Value of Growth Opportunitiesfor Fledgling Electronics
  77. 4-5 Valuing a Business by Discounted Cash Flow
  78. Valuing the Concatenator Business
  79. Valuation Format
  80. Estimating Horizon Value
  81. A Further Reality Check
  82. Free Cash Flow, Dividends, and Repurchases
  83. SUMMARY
  84. PROBLEMSETS
  85. FINANCE ONTHE WEB
  86. MINI-CASE: Reeby Sports
  87. Chapter 5 Net Present Valueand Other Investment Criteria
  88. 5-1 A Review of the Basics
  89. Net Present Value’s Competitors
  90. Three Points to Remember about NPV
  91. NPV Depends on Cash Flow, Not on Book Returns
  92. 5-2 Payback
  93. Discounted Payback
  94. 5-3 Internal (or Discounted-Cash-Flow) Rate of Return
  95. Calculating the IRR
  96. The IRR Rule
  97. Pitfall 1—Lending or Borrowing?
  98. Pitfall 2—Multiple Rates of Return
  99. Pitfall 3—Mutually Exclusive Projects
  100. Pitfall 4—What Happens When There Is More thanOne Opportunity Cost of Capital?
  101. The Verdict on IRR
  102. 5-4 Choosing Capital Investments When Resources Are Limited
  103. An Easy Problem in Capital Rationing
  104. Uses of Capital Rationing Models
  105. SUMMARY
  106. FURTHER READING
  107. PROBLEM SETS
  108. MINI-CASE: Vegetron’s CFO Calls Again
  109. Chapter 6 Making Investment Decisionswith the Net Present Value Rule
  110. 6-1 Applying the Net Present Value Rule
  111. Rule 1: Only Cash Flow Is Relevant
  112. Rule 2: Estimate Cash Flows on an Incremental Basis
  113. Rule 3: Treat Inflation Consistently
  114. Rule 4: Separate Investment and Financing Decisions
  115. 6-2 Example—IM&C’s Fertilizer Project
  116. Separating Investment and Financing Decisions
  117. Investments in Working Capital
  118. A Further Note on Depreciation
  119. A Final Comment on Taxes
  120. Project Analysis
  121. Calculating NPV in Other Countries and Currencies
  122. 6-3 Using the NPV Rule to Choose among Projects
  123. Problem 1: The Investment Timing Decision
  124. Problem 2: The Choice between Long- and Short-Lived Equipment
  125. Problem 3: When to Replace an Old Machine
  126. Problem 4: Cost of Excess Capacity
  127. SUMMARY
  128. PROBLEM SETS
  129. MINI-CASE: New Economy Transport (A)
  130. New Economy Transport (B)
  131. Chapter 7 Introduction to Risk and Return
  132. 7-1 Over a Century of Capital Market History in One Easy Lesson
  133. Arithmetic Averages and Compound Annual Returns
  134. Using Historical Evidence to Evaluate Today’s Cost of Capital
  135. Dividend Yields and the Risk Premium
  136. 7-2 Measuring Portfolio Risk
  137. Variance and Standard Deviation
  138. Measuring Variability
  139. How Diversification Reduces Risk
  140. 7-3 Calculating Portfolio Risk
  141. General Formula for Computing Portfolio Risk
  142. Do I Really Have to Add up 25 Million Boxes?
  143. 7-4 How Individual Securities Affect Portfolio Risk
  144. Market Risk Is Measured by Beta
  145. Why Security Betas Determine Portfolio Risk
  146. 7-5 Diversification and Value Additivity
  147. SUMMARY
  148. FURTHER READING
  149. PROBLEM SETS
  150. FINANCE ONTHE WEB
  151. Chapter 8 Portfolio Theory and the Capital Asset Pricing Model
  152. 8-1 Harry Markowitz and the Birth of Portfolio Theory
  153. Combining Stocks into Portfolios
  154. We Introduce Borrowing and Lending
  155. 8-2 The Relationship Between Risk and Return
  156. Some Estimates of Expected Returns
  157. Review of the Capital Asset Pricing Model
  158. What If a Stock Did Not Lie on the Security Market Line?
  159. 8-3 Validity and Role of the Capital Asset Pricing Model
  160. Tests of the Capital Asset Pricing Model
  161. Assumptions behind the Capital Asset Pricing Model
  162. 8-4 Some Alternative Theories
  163. Arbitrage Pricing Theory
  164. A Comparison of the Capital Asset Pricing Modeland Arbitrage Pricing Theory
  165. The Three-Factor Model
  166. SUMMARY
  167. FURTHER READING
  168. PROBLEM SETS
  169. FINANCE ON THE WEB
  170. MINI-CASE: John and Marsha on Portfolio Selection
  171. Chapter 9 Risk and the Cost of Capital
  172. 9-1 Company and Project Costs of Capital
  173. Perfect Pitch and the Cost of Capital
  174. Debt and the Company Cost of Capital
  175. 9-2 Measuring the Cost of Equity
  176. Estimating Beta
  177. The Expected Return on Union Pacific Corporation’s Common Stock
  178. Union Pacific’s After-Tax Weighted-Average Cost of Capital
  179. Union Pacific’s Asset Beta
  180. 9-3 Analyzing Project Risk
  181. What Determines Asset Betas?
  182. Don’t Be Fooled by Diversifiable Risk
  183. Avoid Fudge Factors in Discount Rates
  184. Discount Rates for International Projects
  185. 9-4 Certainty Equivalents—Another Way to Adjust for Risk
  186. Valuation by Certainty Equivalents
  187. When to Use a Single Risk-Adjusted Discount Ratefor Long-Lived Assets
  188. A Common Mistake
  189. When You Cannot Use a Single Risk-AdjustedDiscount Rate for Long-Lived Assets
  190. SUMMARY
  191. FURTHER READING
  192. PROBLEM SETS
  193. FINANCE ON THE WEB
  194. MINI-CASE: The Jones Family, Incorporated
  195. Chapter 10 Project Analysis
  196. 10-1 The Capital Investment Process
  197. Project Authorizations—and the Problem of Biased Forecasts
  198. Postaudits
  199. 10-2 Sensitivity Analysis
  200. Value of Information
  201. Limits to Sensitivity Analysis
  202. Scenario Analysis
  203. Break-Even Analysis
  204. Operating Leverage and the Break-Even Point
  205. 10-3 Monte Carlo Simulation
  206. Simulating the Electric Scooter Project
  207. 10-4 Real Options and Decision Trees
  208. The Option to Expand
  209. The Option to Abandon
  210. Production Options
  211. Timing Options
  212. More on Decision Trees
  213. Pro and Con Decision Trees
  214. SUMMARY
  215. FURTHER READING
  216. PROBLEM SETS
  217. MINI-CASE: Waldo County
  218. Chapter 11 Investment, Strategy,and Economic Rents
  219. 11-1 Look First to Market Values
  220. The Cadillac and the Movie Star
  221. 11-2 Economic Rents and Competitive Advantage
  222. 11-3 Marvin Enterprises Decides to Exploit a New Technology—an Example
  223. Forecasting Prices of Gargle Blasters
  224. The Value of Marvin’s New Expansion
  225. Alternative Expansion Plans
  226. The Value of Marvin Stock
  227. The Lessons of Marvin Enterprises
  228. SUMMARY
  229. FURTHER READING
  230. PROBLEM SETS
  231. MINI-CASE: Ecsy-Cola
  232. Chapter12 Agency Problems, Compensation,and Performance Measurement
  233. 12-1 Incentives and Compensation
  234. Agency Problems in Capital Budgeting
  235. Agency Problems and Risk Taking
  236. Monitoring
  237. Management Compensation
  238. Incentive Compensation
  239. Monitoring Pay for Performance
  240. 12-2 Measuring and Rewarding Performance: Residual Income and EVA
  241. Pros and Cons of EVA
  242. 12-3 Biases in Accounting Measures of Performance
  243. Example: Measuring the Profitability of the Nodhead Supermarket
  244. Measuring Economic Profitability
  245. Do the Biases Wash Out in the Long Run?
  246. What Can We Do about Biases in Accounting Profitability Measures?
  247. Earnings and Earnings Targets
  248. SUMMARY
  249. FURTHER READING
  250. PROBLEM SETS
  251. Chapter 13 Efficient Marketsand Behavioral Finance
  252. 13-1 We Always Come Back to NPV
  253. Differences between Investment and Financing Decisions
  254. 13-2 What Is an Efficient Market?
  255. A Startling Discovery: Price Changes Are Random
  256. Competition and the Efficient Market Hypothesis
  257. Efficient Markets: The Evidence
  258. 13-3 The Evidence Against Market Efficiency
  259. Do Investors Respond Slowly to New Information?
  260. Bubbles and Market Efficiency
  261. 13-4 Behavioral Finance
  262. Sentiment
  263. Limits to Arbitrage
  264. Incentive Problems and the Subprime Crisis
  265. 13-5 The Five Lessons of Market Efficiency
  266. Lesson 1: Markets Have No Memory
  267. Lesson 2: Trust Market Prices
  268. Lesson 3: Read the Entrails
  269. Lesson 4: The Do-It-Yourself Alternative
  270. Lesson 5: Seen One Stock, Seen Them All
  271. What If Markets Are Not Efficient? Implicationsfor the Financial Manager
  272. SUMMARY
  273. FURTHER READING
  274. PROBLEM SETS
  275. FINANCE ON THE WEB
  276. Chapter 14 An Overview ofCorporate Financing
  277. 14-1 Patterns of Corporate Financing
  278. Do Firms Rely Too Much on Internal Funds?
  279. How Much Do Firms Borrow?
  280. 14-2 Common Stock
  281. Voting Procedures
  282. Dual-Class Shares and Private Benefits
  283. Equity in Disguise
  284. Preferred Stock
  285. 14-3 Debt
  286. Debt Comes in Many Forms
  287. A Debt by Any Other Name
  288. Variety’s the Very Spice of Life
  289. 14-4 Financial Markets and Intermediaries
  290. Financial Markets
  291. Financial Intermediaries
  292. Investment Funds
  293. Financial Institutions
  294. 14-5 The Role of Financial Markets and Intermediaries
  295. The Payment Mechanism
  296. Borrowing and Lending
  297. Pooling Risk
  298. Information Provided by Financial Markets
  299. The Financial Crisis of 2007–2009
  300. SUMMARY
  301. FURTHER READING
  302. PROBLEM SETS
  303. FINANCE ON THE WEB
  304. Chapter 15 How Corporations Issue Securities
  305. 15-1 Venture Capital
  306. The Venture Capital Market
  307. 15-2 The Initial Public Offering
  308. Arranging an Initial Public Offering
  309. The Sale of Marvin Stock
  310. The Underwriters
  311. Costs of a New Issue
  312. Underpricing of IPOs
  313. Hot New-Issue Periods
  314. 15-3 Alternative Issue Procedures for IPOs
  315. Types of Auction: A Digression
  316. 15-4 Security Sales by Public Companies
  317. General Cash Offers
  318. International Security Issues
  319. The Costs of a General Cash Offer
  320. Market Reaction to Stock Issues
  321. Rights Issues
  322. 15-5 Private Placements and Public Issues
  323. SUMMARY
  324. FURTHER READING
  325. PROBLEM SETS
  326. FINANCE ON THE WEB
  327. Appendix: Marvin’s New-Issue Prospectus
  328. Chapter 16 Payout Policy
  329. 16-1 Facts About Payout
  330. How Firms Pay Dividends
  331. How Firms Repurchase Stock
  332. 16-2 The Information Content of Dividends and Repurchases
  333. The Information Content of Share Repurchases
  334. 16-3 Dividends or Repurchases? The Payout Controversy
  335. Payout Policy Is Irrelevant in Perfect Capital Markets
  336. Dividends or Repurchases? An Example
  337. Stock Repurchases and DCF Models of Share Price
  338. Dividends and Share Issues
  339. 16-4 The Rightists
  340. Payout Policy, Investment Policy, and Management Incentives
  341. 16-5 Taxes and the Radical Left
  342. Empirical Evidence on Dividends and Taxes
  343. Alternative Tax Systems
  344. Taxes and Payout—A Summary
  345. 16-6 Payout Policy and the Life Cycle of the Firm
  346. Payout and Corporate Governance
  347. SUMMARY
  348. FURTHER READING
  349. PROBLEM SETS
  350. Chapter 17 Does Debt Policy Matter?
  351. 17-1 The Effect of Financial Leverage in a Competitive Tax-Free Economy
  352. Enter Modigliani and Miller
  353. The Law of Conservation of Value
  354. An Example of Proposition 1
  355. 17-2 Financial Risk and Expected Returns
  356. Proposition 2
  357. How Changing Capital Structure Affects Beta
  358. Watch Out for Hidden Leverage
  359. 17-3 The Weighted-Average Cost of Capital
  360. Two Warnings
  361. Rates of Return on Levered Equity—The Traditional Position
  362. Today’s Unsatisfied Clienteles Are ProbablyInterested in Exotic Securities
  363. Imperfections and Opportunities
  364. 17-4 A Final Word on the After-Tax Weighted-Average Cost of Capital
  365. SUMMARY
  366. FURTHER READING
  367. PROBLEM SETS
  368. Mini-Case: Claxton Drywall Comes to the Rescue
  369. Chapter 18 How Much Should aCorporation Borrow?
  370. 18-1 Corporate Taxes
  371. How Do Interest Tax Shields Contributeto the Value of Stockholders’ Equity?
  372. Recasting Johnson & Johnson’s Capital Structure
  373. MM and Taxes
  374. 18-2 Corporate and Personal Taxes
  375. 18-3 Costs of Financial Distress
  376. Bankruptcy Costs
  377. Evidence on Bankruptcy Costs
  378. Direct versus Indirect Costs of Bankruptcy
  379. Financial Distress without Bankruptcy
  380. Debt and Incentives
  381. Risk Shifting: The First Game
  382. Refusing to Contribute Equity Capital: The Second Game
  383. And Three More Games, Briefly
  384. What the Games Cost
  385. Costs of Distress Vary with Type of Asset
  386. The Trade-Off Theory of Capital Structure
  387. 18-4 The Pecking Order of Financing Choices
  388. Debt and Equity Issues with Asymmetric Information
  389. Implications of the Pecking Order
  390. The Trade-Off Theory vs. the Pecking-Order Theory—Some Evidence
  391. The Bright Side and the Dark Side of Financial Slack
  392. Is There a Theory of Optimal Capital Structure?
  393. SUMMARY
  394. FURTHER READING
  395. PROBLEM SETS
  396. FINANCE ON THE WEB
  397. Chapter 19 Financing and Valuation
  398. 19-1 The After-Tax Weighted-Average Cost of Capital
  399. Review of Assumptions
  400. Mistakes People Make in Using the Weighted-Average Formula
  401. 19-2 Valuing Businesses
  402. Valuing Rio Corporation
  403. Estimating Horizon Value
  404. WACC vs. the Flow-to-Equity Method
  405. 19-3 Using WACC In Practice
  406. Some Tricks of the Trade
  407. Adjusting WACC when Debt Ratios and Business Risks Differ
  408. Unlevering and Relevering Betas
  409. The Importance of Rebalancing
  410. The Modigliani–Miller Formula, Plus Some Final Advice
  411. 19-4 Adjusted Present Value
  412. APV for the Perpetual Crusher
  413. Other Financing Side Effects
  414. APV for Businesses
  415. APV for International Investments
  416. 19-5 Your Questions Answered
  417. SUMMARY
  418. FURTHER READING
  419. PROBLEM SETS
  420. FINANCE ON THE WEB
  421. Appendix: Discounting Safe, Nominal Cash Flows
  422. Chapter 20 Understanding Options
  423. 20-1 Calls, Puts, and Shares
  424. Call Options and Position Diagrams
  425. Put Options
  426. Selling Calls and Puts
  427. Position Diagrams Are Not Profit Diagrams
  428. 20-2 Financial Alchemy with Options
  429. Spotting the Option
  430. 20-3 What Determines Option Values?
  431. Risk and Option Values
  432. SUMMARY
  433. FURTHER READING
  434. PROBLEM SETS
  435. FINANCE ON THE WEB
  436. Chapter 21 Valuing Options
  437. 21-1 A Simple Option-Valuation Model
  438. Why Discounted Cash Flow Won’t Work for Options
  439. Constructing Option Equivalents fromCommon Stocks and Borrowing
  440. Valuing the Google Put Option
  441. 21-2 The Binomial Method for Valuing Options
  442. Example: The Two-Step Binomial Method
  443. The General Binomial Method
  444. The Binomial Method and Decision Trees
  445. 21-3 The Black–Scholes Formula
  446. Using the Black–Scholes Formula
  447. The Risk of an Option
  448. The Black–Scholes Formula and the Binomial Method
  449. 21-4 Black–Scholes in Action
  450. Executive Stock Options
  451. Warrants
  452. Portfolio Insurance
  453. Calculating Implied Volatilities
  454. 21-5 Option Values at a Glance
  455. 21-6 The Option Menagerie
  456. SUMMARY
  457. FURTHER READING
  458. PROBLEM SETS
  459. FINANCE ON THE WEB
  460. MINI-CASE: Bruce Honiball’s Invention
  461. Chapter 22 Real Options
  462. 22-1 The Value of Follow-On Investment Opportunities
  463. Questions and Answers about Blitzen’s Mark II
  464. Other Expansion Options
  465. 22-2 The Timing Option
  466. Valuing the Malted Herring Option
  467. Optimal Timing for Real Estate Development
  468. 22-3 The Abandonment Option
  469. Bad News for the Perpetual Crusher
  470. Abandonment Value and Project Life
  471. Temporary Abandonment
  472. 22-4 Flexible Production and Procurement
  473. Aircraft Purchase Options
  474. 22-5 Investment in Pharmaceutical R&D
  475. 22-6 Valuing Real Options
  476. A Conceptual Problem?
  477. What about Taxes?
  478. Practical Challenges
  479. SUMMARY
  480. FURTHER READING
  481. PROBLEM SETS
  482. Chapter 23 Credit Risk and the Valueof Corporate Debt
  483. 23-1 Yields on Corporate Debt
  484. What Determines the Yield Spread?
  485. 23-2 The Option to Default
  486. How the Default Option Affects a Bond’s Risk and Yield
  487. A Digression: Valuing Government Financial Guarantees
  488. 23-3 Bond Ratings and the Probability of Default
  489. 23-4 Predicting the Probability of Default
  490. Credit Scoring
  491. Market-Based Risk Models
  492. 23-5 Value at Risk
  493. SUMMARY
  494. FURTHER READING
  495. PROBLEM SETS
  496. FINANCE ON THE WEB
  497. Chapter 24 The Many Different Kinds of Debt
  498. 24-1 Long-Term Bonds
  499. Bond Terms
  500. Security and Seniority
  501. Asset-Backed Securities
  502. Sinking Funds
  503. Call Provisions
  504. Bond Covenants
  505. Privately Placed Bonds
  506. Foreign Bonds, Eurobonds, and Global Bonds
  507. 24-2 Convertible Securities and Some Unusual Bonds
  508. The Value of a Convertible at Maturity
  509. Forcing Conversion
  510. Why Do Companies Issue Convertibles?
  511. Valuing Convertible Bonds
  512. A Variation on Convertible Bonds: The Bond–Warrant Package
  513. Innovation in the Bond Market
  514. 24-3 Bank Loans
  515. Commitment
  516. Maturity
  517. Rate of Interest
  518. Syndicated Loans
  519. Security
  520. Debt Covenants
  521. 24-4 Commercial Paper and Medium-Term Notes
  522. Commercial Paper
  523. Medium-Term Notes
  524. SUMMARY
  525. FURTHER READING
  526. PROBLEM SETS
  527. MINI-CASE: The Shocking Demise of Mr. Thorndike
  528. Appendix: Project Finance
  529. Chapter 25 Leasing
  530. 25-1 What Is a Lease?
  531. 25-2 Why Lease?
  532. Sensible Reasons for Leasing
  533. Some Dubious Reasons for Leasing
  534. 25-3 Operating Leases
  535. Example of an Operating Lease
  536. Lease or Buy?
  537. 25-4 Valuing Financial Leases
  538. Example of a Financial Lease
  539. Who Really Owns the Leased Asset?
  540. Leasing and the Internal Revenue Service
  541. A First Pass at Valuing a Lease Contract
  542. The Story So Far
  543. 25-5 When Do Financial Leases Pay?
  544. Leasing around the World
  545. 25-6 Leveraged Leases
  546. SUMMARY
  547. FURTHER READING
  548. PROBLEM SETS
  549. Chapter 26 Managing Risk
  550. 26-1 Why Manage Risk?
  551. Reducing the Risk of Cash Shortfalls or Financial Distress
  552. Agency Costs May Be Mitigated by Risk Management
  553. The Evidence on Risk Management
  554. 26-2 Insurance
  555. 26-3 Reducing Risk with Options
  556. 26-4 Forward and Futures Contracts
  557. A Simple Forward Contract
  558. Futures Exchanges
  559. The Mechanics of Futures Trading
  560. Trading and Pricing Financial Futures Contracts
  561. Spot and Futures Prices—Commodities
  562. More about Forward Contracts
  563. Homemade Forward Rate Contracts
  564. 26-5 Swaps
  565. Interest Rate Swaps
  566. Currency Swaps
  567. Some Other Swaps
  568. 26-6 How to Set Up a Hedge
  569. Hedging Interest Rate Risk
  570. Hedge Ratios and Basis Risk
  571. 26-7 Is “Derivative” a Four-Letter Word?
  572. SUMMARY
  573. FURTHER READING
  574. PROBLEM SETS
  575. FINANCE ON THE WEB
  576. MINI-CASE: Rensselaer Advisers
  577. Chapter 27 Managing International Risks
  578. 27-1 The Foreign Exchange Market
  579. 27-2 Some Basic Relationships
  580. Interest Rates and Exchange Rates
  581. The Forward Premium and Changes in Spot Rates
  582. Changes in the Exchange Rate and Inflation Rates
  583. Interest Rates and Inflation Rates
  584. Is Life Really That Simple?
  585. 27-3 Hedging Currency Risk
  586. Transaction Exposure and Economic Exposure
  587. 27-4 Exchange Risk and International Investment Decisions
  588. The Cost of Capital for International Investments
  589. 27-5 Political Risk
  590. SUMMARY
  591. FURTHER READING
  592. PROBLEM SETS
  593. FINANCE ON THE WEB
  594. Mini Case: Exacta, s.a.
  595. Chapter 28 Financial Analysis
  596. 28-1 Financial Ratios
  597. 28-2 Financial Statements
  598. 28-3 Home Depot’s Financial Statements
  599. The Balance Sheet
  600. The Income Statement
  601. 28-4 Measuring Home Depot’s Performance
  602. Economic Value Added (EVA)
  603. Accounting Rates of Return
  604. Problems with EVA and Accounting Rates of Return
  605. 28-5 Measuring Efficiency
  606. 28-6 Analyzing the Return on Assets: The Du Pont System
  607. The Du Pont System
  608. 28-7 Measuring Leverage
  609. Leverage and the Return on Equity
  610. 28-8 Measuring Liquidity
  611. 28-9 Interpreting Financial Ratios
  612. SUMMARY
  613. FURTHER READING
  614. PROBLEM SETS
  615. FINANCE ON THE WEB
  616. Chapter 29 Financial Planning
  617. 29-1 Links Between Short-Term and Long-Term Financing Decisions
  618. 29-2 Tracing Changes in Cash
  619. The Cash Cycle
  620. 29-3 Cash Budgeting
  621. Preparing the Cash Budget: Inflows
  622. Preparing the Cash Budget: Outflows
  623. 29-4 The Short-Term Financing Plan
  624. Options for Short-Term Financing
  625. Dynamic’s Financing Plan
  626. Evaluating the Plan
  627. A Note on Short-Term Financial Planning Models
  628. 29-5 Long-Term Financial Planning
  629. Why Build Financial Plans?
  630. A Long-Term Financial Planning Model for Dynamic Mattress
  631. Pitfalls in Model Design
  632. Choosing a Plan
  633. 29-6 Growth and External Financing
  634. SUMMARY
  635. FURTHER READING
  636. PROBLEM SETS
  637. FINANCE ONTHE WEB
  638. Chapter 30 Working Capital Management
  639. 30-1 Inventories
  640. 30-2 Credit Management
  641. Terms of Sale
  642. The Promise to Pay
  643. Credit Analysis
  644. The Credit Decision
  645. Collection Policy
  646. 30-3 Cash
  647. How Purchases Are Paid For
  648. Speeding Up Check Collections
  649. International Cash Management
  650. Paying for Bank Services
  651. 30-4 Marketable Securities
  652. Calculating the Yield on Money-Market Investments
  653. Yields on Money-Market Investments
  654. The International Money Market
  655. Money-Market Instruments
  656. SUMMARY
  657. FURTHER READING
  658. PROBLEM SETS
  659. FINANCE ON THE WEB
  660. Chapter 31 Mergers
  661. 31-1 Sensible Motives for Mergers
  662. Economies of Scale
  663. Economies of Vertical Integration
  664. Complementary Resources
  665. Surplus Funds
  666. Eliminating Inefficiencies
  667. Industry Consolidation
  668. 31-2 Some Dubious Reasons for Mergers
  669. Diversification
  670. Increasing Earnings per Share: The Bootstrap Game
  671. Lower Financing Costs
  672. 31-3 Estimating Merger Gains and Costs
  673. Right and Wrong Ways to Estimate the Benefits of Mergers
  674. More on Estimating Costs—What If the Target’sStock Price Anticipates the Merger?
  675. Estimating Cost When the Merger Is Financed by Stock
  676. Asymmetric Information
  677. 31-4 The Mechanics of a Merger
  678. Mergers, Antitrust Law, and Popular Opposition
  679. The Form of Acquisition
  680. Merger Accounting
  681. Some Tax Considerations
  682. Cross-Border Mergers and Tax Inversion
  683. 31-5 Proxy Fights, Takeovers, and the Market for Corporate Control
  684. Proxy Contests
  685. Takeovers
  686. Oracle Bids for PeopleSoft
  687. Takeover Defenses
  688. Who Gains Most in Mergers?
  689. 31-6 Mergers and the Economy
  690. Merger Waves
  691. Do Mergers Generate Net Benefits?
  692. SUMMARY
  693. FURTHERREADING
  694. PROBLEMSETS
  695. APPENDIX: Conglomerate Mergers and Value Additivity
  696. Chapter 32 Corporate Restructuring
  697. 32-1 Leveraged Buyouts
  698. The RJR Nabisco LBO
  699. Barbarians at the Gate?
  700. Leveraged Restructurings
  701. LBOs and Leveraged Restructurings
  702. 32-2 Fusion and Fission in Corporate Finance
  703. Spin-Offs
  704. Carve-Outs
  705. Asset Sales
  706. Privatization and Nationalization
  707. 32-3 Private Equity
  708. Private-Equity Partnerships
  709. Are Private-Equity Funds Today’s Conglomerates?
  710. 32-4 Bankruptcy
  711. Is Chapter 11 Efficient?
  712. Workouts
  713. Alternative Bankruptcy Procedures
  714. SUMMARY
  715. FURTHER READING
  716. PROBLEM SETS
  717. Chapter 33 Governance and CorporateControlAround the World
  718. 33-1 Financial Markets and Institutions
  719. Investor Protection and the Development of Financial Markets
  720. 33-2 Ownership, Control, and Governance
  721. Ownership and Control in Japan
  722. Ownership and Control in Germany
  723. European Boards of Directors
  724. Shareholders versus Stakeholders
  725. Ownership and Control in Other Countries
  726. Conglomerates Revisited
  727. 33-3 Do These Differences Matter?
  728. Risk and Short-Termism
  729. Growth Industries and Declining Industries
  730. Transparency and Governance
  731. SUMMARY
  732. FURTHER READING
  733. PROBLEM SETS
  734. Chapter 34 Conclusion: What We Doand Do Not Know about Finance
  735. 34-1 What We Do Know: The Seven Most Important Ideas in Finance
  736. 1. Net Present Value
  737. 2. The Capital Asset Pricing Model
  738. 3. Efficient Capital Markets
  739. 4. Value Additivity and the Law of Conservation of Value
  740. 5. Capital Structure Theory
  741. 6. Option Theory
  742. 7. Agency Theory
  743. 34-2 What We Do Not Know: 10 Unsolved Problems in Finance
  744. 1. What Determines Project Risk and Present Value?
  745. 2. Risk and Return—What Have We Missed?
  746. 3. How Important Are the Exceptions to the Efficient-Market Theory?
  747. 4. Is Management an Off-Balance-Sheet Liability?
  748. 5. How Can We Explain the Success of New Securities and New Markets?
  749. 6. How Can We Resolve the Payout Controversy?
  750. 7. What Risks Should a Firm Take?
  751. 8. What Is the Value of Liquidity?
  752. 9. How Can We Explain Merger Waves?
  753. 10. Why Are Financial Systems So Prone to Crisis?
  754. 34-3 A Final Word
  755. Appendix
  756. Glossary
  757. Index
  758. Back cover

 

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