لایب سان

0135183790, 9780135183793

Table of contents : Welcome Welcome Part 1: Introduction Part 1: Introduction 1: The Corporation and Financial Markets Introduction: The Corporation and Financial Markets 1.1: The Four Types of Firms 1.1.2: Partnerships 1.1.3: Limited Liability Companies 1.1.4: Corporations 1.1.5: Tax Implications for Corporate Entities 1.2: Ownership Versus Control of Corporations 1.2.2: The Financial Manager 1.2.3: The Goal of the Firm 1.2.4: The Firm and Society 1.2.5: Ethics and Incentives within Corporations 1.3: The Stock Market 1.3.2: Traditional Trading Venues 1.3.3: New Competition and Market Changes 1.3.4: Dark Pools 1.4: FinTech: Finance and Technology 1.4.2: Security and Verification 1.4.3: Automation of Banking Services 1.4.4: Big Data and Machine Learning 1.4.5: Competition Summary: The Corporation and Financial Markets Key Terms Further Reading Problems 2: Introduction to Financial Statement Analysis Introduction: Introduction to Financial Statement Analysis 2.1: Firms’ Disclosure of Financial Information 2.1.2: Types of Financial Statements 2.2: The Balance Sheet 2.2.2: Liabilities 2.2.3: Stockholders’ Equity 2.2.4: Market Value Versus Book Value 2.2.5: Enterprise Value 2.3: The Income Statement 2.4: The Statement of Cash Flows 2.4.2: Investment Activity 2.4.3: Financing Activity 2.5: Other Financial Statement Information 2.5.2: Management Discussion and Analysis 2.5.3: Notes to the Financial Statements 2.6: Financial Statement Analysis 2.6.2: Liquidity Ratios 2.6.3: Working Capital Ratios 2.6.4: Interest Coverage Ratios 2.6.5: Leverage Ratios 2.6.6: Valuation Ratios 2.6.7: Operating Returns 2.6.8: The DuPont Identity 2.7: Financial Reporting in Practice 2.7.2: WorldCom 2.7.3: Sarbanes-Oxley Act 2.7.4: Dodd-Frank Act Summary: Introduction to Financial Statement Analysis Key Terms Further Reading Problems Data Case 3: Financial Decision Making and the Law of One Price Introduction: Financial Decision Making and the Law of One Price 3.1: Valuing Decisions 3.1.2: Using Market Prices to Determine Cash Values 3.2: Interest Rates and the Time Value of Money 3.2.2: The Interest Rate: An Exchange Rate Across Time 3.3: Present Value and the NPV Decision Rule 3.3.2: The NPV Decision Rule 3.3.3: NPV and Cash Needs 3.4: Arbitrage and the Law of One Price 3.4.2: Law of One Price 3.5: No-Arbitrage and Security Prices 3.5.2: The NPV of Trading Securities and Firm Decision Making 3.5.3: Valuing a Portfolio 3.5.4: Where Do We Go from Here? Summary: Financial Decision Making and the Law of One Price Key Terms Further Reading Problems Data Case 3 Appendix: The Price of Risk Introduction: The Price of Risk 3A.1: Risky Versus Risk-Free Cash Flows 3A.1.2: The No-Arbitrage Price of a Risky Security 3A.1.3: Risk Premiums Depend on Risk 3A.1.4: Risk Is Relative to the Overall Market 3A.1.5: Risk, Return, and Market Prices 3A.2: Arbitrage with Transactions Costs Summary: The Price of Risk Key Terms Problems Part 2: Time, Money, and Interest Rates Part 2: Time, Money, and Interest Rates 4: The Time Value of Money Introduction: The Time Value of Money 4.1: The Timeline 4.2: The Three Rules of Time Travel 4.2.2: Rule 2: Moving Cash Flows Forward in Time 4.2.3: Rule 3: Moving Cash Flows Back in Time 4.2.4: Applying the Rules of Time Travel 4.3: Valuing a Stream of Cash Flows 4.4: Calculating the Net Present Value 4.5: Perpetuities and Annuities 4.5.2: Annuities 4.5.3: Growing Cash Flows 4.6: Using an Annuity Spreadsheet or Calculator 4.7: Non-Annual Cash Flows 4.8: Solving for the Cash Payments 4.9: The Internal Rate of Return Summary: The Time Value of Money Key Terms Further Reading Problems Data Case 4 Appendix: Solving for the Number of Periods Introduction: Solving for the Number of Periods Summary: Solving for the Number of Periods 5: Interest Rates Introduction: Interest Rates 5.1: Interest Rate Quotes and Adjustments 5.1.2: Annual Percentage Rates 5.2: Application: Discount Rates and Loans 5.3: The Determinants of Interest Rates 5.3.2: Investment and Interest Rate Policy 5.3.3: The Yield Curve and Discount Rates 5.3.4: The Yield Curve and the Economy 5.4: Risk and Taxes 5.4.2: After-Tax Interest Rates 5.5: The Opportunity Cost of Capital Summary: Interest Rates Key Terms Further Reading Problems Data Case 5 Appendix: Continuous Rates and Cash Flows Introduction: Continuous Rates and Cash Flows 5A.1: Discount Rates for a Continuously Compounded APR 5A.2: Continuously Arriving Cash Flows 6: Valuing Bonds Introduction: Valuing Bonds 6.1: Bond Cash Flows, Prices, and Yields 6.1.2: Zero-Coupon Bonds 6.1.3: Coupon Bonds 6.2: Dynamic Behavior of Bond Prices 6.2.2: Time and Bond Prices 6.2.3: Interest Rate Changes and Bond Prices 6.3: The Yield Curve and Bond Arbitrage 6.3.2: Valuing a Coupon Bond Using Zero-Coupon Yields 6.3.3: Coupon Bond Yields 6.3.4: Treasury Yield Curves 6.4: Corporate Bonds 6.4.2: Bond Ratings 6.4.3: Corporate Yield Curves 6.5: Sovereign Bonds Summary: Valuing Bonds Key Terms Further Reading Problems Data Case Case Study 6 Appendix: Forward Interest Rates Introduction: Forward Interest Rates 6A.1: Computing Forward Rates 6A.2: Computing Bond Yields from Forward Rates 6A.3: Forward Rates and Future Interest Rates Summary: Forward Interest Rates Key Terms Problems Part 3: Valuing Projects and Firms Part 3: Valuing Projects and Firms 7: Investment Decision Rules Introduction: Investment Decision Rules 7.1: NPV and Stand-Alone Projects 7.1.2: The NPV Profile and IRR 7.1.3: Alternative Rules Versus the NPV Rule 7.2: The Internal Rate of Return Rule 7.2.2: Pitfall #1: Delayed Investments 7.2.3: Pitfall #2: Multiple IRRs 7.2.4: Pitfall #3: Nonexistent IRR 7.3: The Payback Rule 7.3.2: Payback Rule Pitfalls in Practice 7.4: Choosing between Projects 7.4.2: IRR Rule and Mutually Exclusive Investments 7.4.3: The Incremental IRR 7.5: Project Selection with Resource Constraints 7.5.2: Profitability Index 7.5.3: Shortcomings of the Profitability Index Summary: Investment Decision Rules Key Terms Further Reading Problems Data Case 7 Appendix: Computing the NPV Profile Using Excel’s Data Table Function 7 Appendix: Computing the NPV Profile Using Excel’s Data Table Function 8: Fundamentals of Capital Budgeting Introduction: Fundamentals of Capital Budgeting 8.1: Forecasting Earnings 8.1.2: Incremental Earnings Forecast 8.1.3: Indirect Effects on Incremental Earnings 8.1.4: Sunk Costs and Incremental Earnings 8.1.5: Real-World Complexities 8.2: Determining Free Cash Flow and NPV 8.2.2: Calculating Free Cash Flow Directly 8.2.3: Calculating the NPV 8.3: Choosing among Alternatives 8.3.2: Comparing Free Cash Flows for Cisco’s Alternatives 8.4: Further Adjustments to Free Cash Flow 8.5: Analyzing the Project 8.5.2: Sensitivity Analysis 8.5.3: Scenario Analysis Summary: Fundamentals of Capital Budgeting Key Terms Further Reading Problems Data Case 8 Appendix: MACRS Depreciation 8 Appendix: MACRS Depreciation 9: Valuing Stocks Introduction: Valuing Stocks 9.1: The Dividend-Discount Model 9.1.2: Dividend Yields, Capital Gains, and Total Returns 9.1.3: A Multiyear Investor 9.1.4: The Dividend-Discount Model Equation 9.2: Applying the Dividend-Discount Model 9.2.2: Dividends Versus Investment and Growth 9.2.3: Changing Growth Rates 9.2.4: Limitations of the Dividend-Discount Model 9.3: Total Payout and Free Cash Flow Valuation Models 9.3.2: The Discounted Free Cash Flow Model 9.4: Valuation Based on Comparable Firms 9.4.2: Limitations of Multiples 9.4.3: Comparison with Discounted Cash Flow Methods 9.4.4: Stock Valuation Techniques: The Final Word 9.5: Information, Competition, and Stock Prices 9.5.2: Competition and Efficient Markets 9.5.3: Lessons for Investors and Corporate Managers 9.5.4: The Efficient Markets Hypothesis Versus No Arbitrage Summary: Valuing Stocks Key Terms Further Reading Problems Data Case Part 4: Risk and Return Part 4: Risk and Return 10: Capital Markets and the Pricing of Risk Introduction: Capital Markets and the Pricing of Risk 10.1: Risk and Return: Insights from 92 Years of Investor History 10.2: Common Measures of Risk and Return 10.2.2: Expected Return 10.2.3: Variance and Standard Deviation 10.3: Historical Returns of Stocks and Bonds 10.3.2: Average Annual Returns 10.3.3: The Variance and Volatility of Returns 10.3.4: Estimation Error: Using Past Returns to Predict the Future 10.4: The Historical Tradeoff Between Risk and Return 10.4.2: The Returns of Individual Stocks 10.5: Common Versus Independent Risk 10.5.2: The Role of Diversification 10.6: Diversification in Stock Portfolios 10.6.2: No Arbitrage and the Risk Premium 10.7: Measuring Systematic Risk 10.7.2: Sensitivity to Systematic Risk: Beta 10.8: Beta and the Cost of Capital 10.8.2: The Capital Asset Pricing Model Summary: Capital Markets and the Pricing of Risk Key Terms Further Reading Problems Data Case 11: Optimal Portfolio Choice and the Capital Asset Pricing Model Introduction: Optimal Portfolio Choice and the Capital Asset Pricing Model 11.1: The Expected Return of a Portfolio 11.2: The Volatility of a Two-Stock Portfolio 11.2.2: Determining Covariance and Correlation 11.2.3: Computing a Portfolio’s Variance and Volatility 11.3: The Volatility of a Large Portfolio 11.3.2: Diversification with an Equally Weighted Portfolio 11.3.3: Diversification with General Portfolios 11.4: Risk Versus Return: Choosing an Efficient Portfolio 11.4.2: The Effect of Correlation 11.4.3: Short Sales 11.4.4: Efficient Portfolios with Many Stocks 11.5: Risk-Free Saving and Borrowing 11.5.2: Borrowing and Buying Stocks on Margin 11.5.3: Identifying the Tangent Portfolio 11.6: The Efficient Portfolio and Required Returns 11.6.2: Expected Returns and the Efficient Portfolio 11.7: The Capital Asset Pricing Model 11.7.2: Supply, Demand, and the Efficiency of the Market Portfolio 11.7.3: Optimal Investing: The Capital Market Line 11.8: Determining the Risk Premium 11.8.2: The Security Market Line 11.8.3: Beta of a Portfolio 11.8.4: Summary of the Capital Asset Pricing Model Summary: Optimal Portfolio Choice and the Capital Asset Pricing Model Key Terms Further Reading Problems Data Case 11 Appendix: The CAPM with Differing Interest Rates Introduction: The CAPM with Differing Interest Rates 11A.1: The Efficient Frontier with Differing Saving and Borrowing Rates 11A.2: The Security Market Line with Differing Interest Rates 12: Estimating the Cost of Capital Introduction: Estimating the Cost of Capital 12.1: The Equity Cost of Capital 12.2: The Market Portfolio 12.2.2: Market Indexes 12.2.3: The Market Risk Premium 12.3: Beta Estimation 12.3.2: Identifying the Best-Fitting Line 12.3.3: Using Linear Regression 12.4: The Debt Cost of Capital 12.4.2: Debt Betas 12.5: A Project’s Cost of Capital 12.5.2: Levered Firms as Comparables 12.5.3: The Unlevered Cost of Capital 12.5.4: Industry Asset Betas 12.6: Project Risk Characteristics and Financing 12.6.2: Financing and the Weighted Average Cost of Capital 12.7: Final Thoughts on Using the CAPM Summary: Estimating the Cost of Capital Key Terms Further Reading Problems Data Case 12 Appendix: Practical Considerations When Forecasting Beta Introduction: Practical Considerations When Forecasting Beta 12A.1: Time Horizon 12A.2: The Market Proxy 12A.3: Beta Variation and Extrapolation 12A.4: Outliers 12A.5: Other Considerations Summary: Practical Considerations When Forecasting Beta Data Case 13: Investor Behavior and Capital Market Efficiency Introduction: Investor Behavior and Capital Market Efficiency 13.1: Competition and Capital Markets 13.1.2: Profiting from Non-Zero Alpha Stocks 13.2: Information and Rational Expectations 13.2.2: Rational Expectations 13.3: The Behavior of Individual Investors 13.3.2: Excessive Trading and Overconfidence 13.3.3: Individual Behavior and Market Prices 13.4: Systematic Trading Biases 13.4.2: Investor Attention, Mood, and Experience 13.4.3: Herd Behavior 13.4.4: Implications of Behavioral Biases 13.5: The Efficiency of the Market Portfolio 13.5.2: The Performance of Fund Managers 13.5.3: The Winners and Losers 13.6: Style-Based Techniques and the Market Efficiency Debate 13.6.2: Momentum 13.6.3: Implications of Positive-Alpha Trading Strategies 13.7: Multifactor Models of Risk 13.7.2: Smart Beta 13.7.3: Long-Short Portfolios 13.7.4: Selecting the Portfolios 13.7.5: The Cost of Capital with Fama-French-Carhart Factor Specification 13.8: Methods Used in Practice 13.8.2: Investors Summary: Investor Behavior and Capital Market Efficiency Key Terms Further Reading Problems 13 Appendix: Building a Multifactor Model Introdcution: Building a Multifactor Model Part 5: Capital Structure Part 5: Capital Structure 14: Capital Structure in a Perfect Market Introduction: Capital Structure in a Perfect Market 14.1: Equity Versus Debt Financing 14.1.2: Financing a Firm with Debt and Equity 14.1.3: The Effect of Leverage on Risk and Return 14.2: Modigliani-Miller I: Leverage, Arbitrage, and Firm Value 14.2.2: Homemade Leverage 14.2.3: The Market Value Balance Sheet 14.2.4: Application: A Leveraged Recapitalization 14.3: Modigliani-Miller II: Leverage, Risk, and the Cost of Capital 14.3.2: Capital Budgeting and the Weighted Average Cost of Capital 14.3.3: Computing the WACC with Multiple Securities 14.3.4: Levered and Unlevered Betas 14.4: Capital Structure Fallacies 14.4.2: Equity Issuances and Dilution 14.5: MM: Beyond the Propositions Summary: Capital Structure in a Perfect Market Key Terms Further Reading Problems Data Case 15: Debt and Taxes Introduction: Debt and Taxes 15.1: The Interest Tax Deduction 15.2: Valuing the Interest Tax Shield 15.2.2: The Interest Tax Shield with Permanent Debt 15.2.3: The Weighted Average Cost of Capital with Taxes 15.2.4: The Interest Tax Shield with a Target Debt-Equity Ratio 15.3: Recapitalizing to Capture the Tax Shield 15.3.2: The Share Repurchase 15.3.3: No Arbitrage Pricing 15.3.4: Analyzing the Recap: The Market Value Balance Sheet 15.4: Personal Taxes 15.4.2: Determining the Actual Tax Advantage of Debt 15.4.3: Valuing the Interest Tax Shield with Personal Taxes 15.5: Optimal Capital Structure with Taxes 15.5.2: Limits to the Tax Benefit of Debt 15.5.3: Growth and Debt 15.5.4: Other Tax Shields 15.5.5: The Low Leverage Puzzle Summary: Debt and Taxes Key Terms Further Reading Problems Data Case 16: Financial Distress, Managerial Incentives, and Information Introduction: Financial Distress, Managerial Incentives, and Information 16.1: Default and Bankruptcy in a Perfect Market 16.1.2: Bankruptcy and Capital Structure 16.2: The Costs of Bankruptcy and Financial Distress 16.2.2: Direct Costs of Bankruptcy 16.2.3: Indirect Costs of Financial Distress 16.3: Financial Distress Costs and Firm Value 16.3.2: Who Pays for Financial Distress Costs? 16.4: Optimal Capital Structure: The Tradeoff Theory 16.4.2: Optimal Leverage 16.5: Exploiting Debt Holders: The Agency Costs of Leverage 16.5.2: Debt Overhang and Under-Investment 16.5.3: Agency Costs and the Value of Leverage 16.5.4: The Leverage Ratchet Effect 16.5.5: Debt Maturity and Covenants 16.6: Motivating Managers: The Agency Benefits of Leverage 16.6.2: Reduction of Wasteful Investment 16.6.3: Leverage and Commitment 16.7: Agency Costs and the Tradeoff Theory 16.7.2: Debt Levels in Practice 16.8: Asymmetric Information and Capital Structure 16.8.2: Issuing Equity and Adverse Selection 16.8.3: Implications for Equity Issuance 16.8.4: Implications for Capital Structure 16.9: Capital Structure: The Bottom Line Summary: Financial Distress, Managerial Incentives, and Information Key Terms Further Reading Problems 17: Payout Policy Introduction: Payout Policy 17.1: Distributions to Shareholders 17.1.2: Share Repurchases 17.2: Comparison of Dividends and Share Repurchases 17.2.2: Alternative Policy 2: Share Repurchase (No Dividend) 17.2.3: Alternative Policy 3: High Dividend (Equity Issue) 17.2.4: Modigliani-Miller and Dividend Policy Irrelevance 17.2.5: Dividend Policy with Perfect Capital Markets 17.3: The Tax Disadvantage of Dividends 17.3.2: Optimal Dividend Policy with Taxes 17.4: Dividend Capture and Tax Clienteles 17.4.2: Tax Differences Across Investors 17.4.3: Clientele Effects 17.5: Payout Versus Retention of Cash 17.5.2: Taxes and Cash Retention 17.5.3: Adjusting for Investor Taxes 17.5.4: Issuance and Distress Costs 17.5.5: Agency Costs of Retaining Cash 17.6: Signaling with Payout Policy 17.6.2: Dividend Signaling 17.6.3: Signaling and Share Repurchases 17.7: Stock Dividends, Splits, and Spin-Offs 17.7.2: Spin-Offs Summary: Payout Policy Key Terms Further Reading Problems Data Case Part 6: Advanced Valuation Part 6: Advanced Valuation 18: Capital Budgeting and Valuation with Leverage Introduction: Capital Budgeting and Valuation with Leverage 18.1: Overview of Key Concepts 18.2: The Weighted Average Cost of Capital Method 18.2.2: Summary of the WACC Method 18.2.3: Implementing a Constant Debt-Equity Ratio 18.3: The Adjusted Present Value Method 18.3.2: Valuing the Interest Tax Shield 18.3.3: Summary of the APV Method 18.4: The Flow-to-Equity Method 18.4.2: Valuing Equity Cash Flows 18.4.3: Summary of the Flow-to-Equity Method 18.5: Project-Based Costs of Capital 18.5.2: Project Leverage and the Equity Cost of Capital 18.5.3: Determining the Incremental Leverage of a Project 18.6: APV with Other Leverage Policies 18.6.2: Predetermined Debt Levels 18.6.3: A Comparison of Methods 18.7: Other Effects of Financing 18.7.2: Security Mispricing 18.7.3: Financial Distress and Agency Costs 18.8: Advanced Topics in Capital Budgeting 18.8.2: Leverage and the Cost of Capital 18.8.3: The WACC or FTE Method with Changing Leverage 18.8.4: Personal Taxes Summary: Capital Budgeting and Valuation with Leverage Key Terms Further Reading Problems Data Case 18 Appendix: Foundations and Further Details Introduction: Foundations and Further Details 18A.1: Deriving the WACC Method 18A.2: The Levered and Unlevered Cost of Capital 18A.3: Solving for Leverage and Value Simultaneously 18A.4: The Residual Income and Economic Value Added Valuation Methods 19: Valuation and Financial Modeling: A Case Study Introduction: Valuation and Financial Modeling: A Case Study 19.1: Valuation Using Comparables 19.2: The Business Plan 19.2.2: Capital Expenditures: A Needed Expansion 19.2.3: Working Capital Management 19.2.4: Capital Structure Changes: Levering Up 19.3: Building the Financial Model 19.3.2: Working Capital Requirements 19.3.3: Forecasting Free Cash Flow 19.3.4: The Balance Sheet and Statement of Cash Flows (Optional) 19.4: Estimating the Cost of Capital 19.4.2: Unlevering Beta 19.4.3: Ideko’s Unlevered Cost of Capital 19.5: Valuing the Investment 19.5.2: The Discounted Cash Flow Approach to Continuation Value 19.5.3: APV Valuation of Ideko’s Equity 19.5.4: A Reality Check 19.5.5: IRR and Cash Multiples 19.6: Sensitivity Analysis Summary: Valuation and Financial Modeling: A Case Study Key Terms Further Reading Problems 19 Appendix: Compensating Management 19 Appendix: Compensating Management Copyright Page and Preface Section 1: Dedication and Copyright Section 2: Bridging Theory and Practice Section 3: Teaching Students to Think Finance Section 4: MyLab Finance Section 5: Improving Results Section 6: About the Authors Section 7: Preface Section 8: Common Symbols and Notation Section 9: Features by Chapter Glossary Glossary

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