Principles of corporate finance

出版说明
作者简介
前言
第一部分　价 值 理 论
第1章　企业目标和治理 1
1.1　公司的投资决策和融资决策 2
1.2　财务经理所扮演的角色和资本的机会成本 6
1.3　公司的目标 9
1.4　代理问题和公司治理 12
本章小结 15
练习题 16
附录净现值准则的基本原则 18
第2章　现值计算 20
2.1　未来价值和现值 21
2.2　永续年金与年金的便捷计算 27
2.3　成长型永续年金与年金的便捷计算 33
2.4　利息支付和标价 35
本章小结 39
练习题 39
第3章　债券估值 45
3.1　利用现值公式进行债券估值 46
3.2　利率怎样影响债券价格 49
3.3　利率的期限结构 53
3.4　期限结构的解释 57
3.5　名义利率与实际利率 59
3.6公司债券和违约风险 65
本章小结 68
推荐阅读 69
练习题 69
第4章　普通股的价值 74
4.1　普通股的转让 75
4.2　普通股的估值 76
4.3　权益资本成本的估计 81
4.4　股票价格与每股收益的关系 87
4.5　采用现金流量贴现的方法对企业估值 90
本章小结 94
推荐阅读 95
练习题 95
微型案例　Reeby Sports公司 99
第5章　净现值与其他准则 101
5.1　基础知识回顾 101
5.2　回收期法 105
5.3　内部收益率（贴现现金流收益率） 107
5.4　资源约束下的资本投资选择 115
本章小结 119
推荐阅读 120
练习题 120
微型案例　维格公司CFO的再次来电 124
第6章　根据净现值法则进行投资决策 127
6.1　净现值法则的应用 128
6.2　示例：IM&C公司的肥料项目 132
6.3　投资的最佳时间选择 140
6.4等值年现金流量 141
本章小结 146
练习题 146
微型案例　新经济运输公司A与B 153
第二部分　风险
第7章　风险与收益概论 156
7.1　百年资本市场简述 156
7.2　投资组合风险的度量 163
7.3　投资组合风险的计算 170
7.4　证券对投资组合风险的影响 174
7.5　分散化与价值叠加 177
本章小结 178
推荐阅读 179
练习题 179
第8章　投资组合理论和资本资产定价模型 185
8.1　哈里·马科维茨与投资组合理论 185
8.2　风险与收益的关系 192
8.3　资本资产定价模型的验证与作用 195
8.4　其他理论 199
本章小结 203
推荐阅读 204
练习题 204
微型案例　约翰与玛莎的投资组合选择 211
第9章　风险和资本成本 213
9.1　公司资本成本与项目资本成本 214
9.2　计算权益成本 217
9.3 分析项目风险 221
9.4　作为风险调整手段的确定性等值 227
本章小结 232
推荐阅读 233
练习题 233
微型案例　琼斯家族公司 237
第三部分　资本预算实务
第10章　项目分析 240
10.1　资本投资过程 241
10.2　敏感性分析 243
10.3　蒙特卡罗模拟 249
10.4　实物期权与决策树 253
本章小结 260
推荐阅读 261
练习题 262
微型案例　Waldo County公司 266
第11章　投资、战略与经济租金 268
11.1　参照市场价值的重要性 268
11.2　经济租金与竞争优势 273
11.3　玛文公司的新技术开发决策 276
本章小结 283
推荐阅读 284
练习题 284
微型案例　Ecsy可乐公司 289
第12章　代理问题、薪酬与业绩评估 290
12.1　激励与薪酬 290
12.2　绩效评估与奖励：留存收益与EVA 298
12.3　会计指标评估绩效时的偏差 301
本章小结 307
推荐阅读 307
练习题 308
第四部分　融资决策与市场有效性
第13章　有效市场与行为金融学 312
13.1　净现值回顾 313
13.2　什么是有效市场 314
13.3　市场有效性质疑 321
13.4　行为金融学 326
13.5　市场有效性的六点启示 329
本章小结 335
推荐阅读 336
练习题 337
第14章　公司融资概述 341
14.1　公司融资方式 341
14.2　普通股 345
14.3　负债 351
14.4　金融市场与金融机构 354
本章小结 357
推荐阅读 358
练习题 359
第15章　公司的证券发行 362
15.1　创业资本 362
15.2　首次公开发行 366
15.3　IPO其他的发行方式 375
15.4　上市公司的证券发售 376
15.5　私募发行与公开发行 381
本章小结 382
推荐阅读 383
练习题 383
附录　玛文公司新股发行的招股说明书 387
第五部分　资金支出政策与资本结构
第16章　股利政策 391
16.1　红利发放的一些数据 391
16.2　公司股利发放与股票回购 392
16.3　公司股利政策的决定 394
16.4　股利发放与股票回购的信息解读 395
16.5　股利政策争议 397
16.6　保守的右派 402
16.7　税收与激进的左派 404
16.8　中庸的中间派 409
本章小结 411
推荐阅读 412
练习题 412
第17章　负债政策的重要性 418
17.1　基于无税竞争经济的财务杠杆效应 419
17.2　财务风险与期望收益 424
17.3　加权平均资本成本 428
17.4　税后加权资本成本总结 433
本章小结 434
推荐阅读 434
练习题 435
第18章　公司负债额度 440
18.1　公司税收 440
18.2　公司税与个人税 444
18.3　财务危机的成本 447
18.4　融资选择的优先次序 460
本章小结 465
推荐阅读 466
练习题 467
第19章　融资与估值 471
19.1　税后加权平均资本成本 471
19.2　公司的估值 475
19.3　WACC应用实务 479
19.4　调整净现值 486
19.5　问题解答 490
本章小结 492
推荐阅读 493
练习题 494
附录　可靠名义现金流的贴现 498
第六部分　期权
第20章　理解期权 502
20.1　看涨期权、看跌期权和股票 503
20.2　期权的金融魔力 507
20.3　期权价值的决定因素 513
本章小结 519
推荐阅读 519
练习题 519
第21章　期权的估值 525
21.1　一个简化的期权定价模型 525
21.2　二项式期权定价法 530
21.3　布莱克-斯科尔斯公式 534
21.4　布莱克-斯科尔斯公式的实际运用 538
21.5　期权价值简述 542
21.6　期权大观 543
本章小结 544
推荐阅读 544
练习题 545
微型案例　布鲁斯·霍尼保的发明 549
附录　股权稀释对期权价值的影响 550
第22章　实物期权 554
22.1　后续投资机会的价值 554
22.2　时间选择期权 558
22.3　项目放弃期权 561
22.4　弹性生产 566
22.5　飞机购买期权 567
22.6　概念性问题 569
本章小结 571
推荐阅读 572
练习题 572
第七部分　债 务 融 资
第23章　信用风险与公司债务的价值 577
23.1　公司债务的收益 577
23.2　违约期权 581
23.3　债券评级与坏账概率 587
23.4　违约概率的预估 588
23.5　风险价值 592
本章小结 594
推荐阅读 594
练习题 595
第24章　各类债务 597
24.1　国内债券、外国债券和欧洲美元债券 598
24.2　债券合约 599
24.3　担保和清偿优先权 601
24.4　偿付准备 603
24.5　债务契约 603
24.6　可转换债券与认股权证 607
24.7　私募与项目融资 612
24.8　债券市场创新 615
本章小结 617
推荐阅读 618
练习题 619
微型案例　桑戴克先生令人震惊的死亡 623
第25章　租赁 625
25.1　租赁概述 625
25.2　租赁的动因 626
25.3　经营租赁 630
25.4　融资租赁的估值 632
25.5　融资租赁的时机 637
25.6　杠杆租赁 638
本章小结 640
推荐阅读 640
练习题 641
第八部分　风 险 管 理
第26章　管理风险 645
26.1　为什么需要管理风险 645
26.2　保险 648
26.3　使用期权来降低风险 651
26.4　远期合约与期货合约 652
26.5　互换 660
26.6如何进行套期保值 664
26.7　“衍生证券”是野蛮世界吗 666
本章小结 668
推荐阅读 669
练习题 670
第27章　管理国际风险 676
27.1　外汇市场 676
27.2　基本关系 678
27.3　货币风险的对冲 687
27.4　外汇风险与国际投资决策 690
27.5　政治风险 694
本章小结 696
推荐阅读 697
练习题 698
微型案例　爱克思塔公司 702
第九部分　财务规划与营运资本管理
第28章　财务分析 704
28.1　财务报表 704
28.2　劳氏公司的财务报表 705
28.3　劳氏公司财务状况评估 708
28.4　效率指标 713
28.5　资产收益率分析：杜邦财务分析体系 714
28.6　财务杠杆指标 716
28.7　流动性指标 718
28.8　对财务比率的解析 720
本章小结 724
推荐阅读 724
练习题 725
第29章　财务计划 731
29.1　短期财务决策与长期财务决策的联系 731
29.2　追踪现金变动的足迹 734
29.3　现金预算 737
29.4　短期融资计划 740
29.5　长期财务计划 743
29.6　企业成长与外部融资 748
本章小结 749
推荐阅读 750
练习题 750
第30章　营运资本管理 757
30.1　存货 758
30.2　信用管理 760
30.3　现金 766
30.4　适销证券 771
30.5　短期借款来源 777
本章小结 782
推荐阅读 784
练习题 784
第十部分　兼并、公司控制与公司治理
第31章　兼并 792
31.1　合理的兼并动因 792
31.2　或有的兼并动因 798
31.3　兼并收益与成本的估计 801
31.4　兼并业务 805
31.5　委托权争夺、接管与公司控制权市场 808
31.6　兼并与经济 814
本章小结 816
推荐阅读 817
练习题 817
附录　混业兼并与价值叠加 820
第32章　公司重组 822
32.1　杠杆收购 822
32.2　公司财务中的聚变与裂变 827
32.3　私募股权 831
32.4　破产 837
本章小结 842
推荐阅读 843
练习题 844
第33章　世界各国的公司治理与公司控制 846
33.1　金融市场与金融机构 846
33.2　所有权、控制权与公司治理 851
33.3　这些差异重要吗 859
本章小结 863
推荐阅读 864
练习题 864
第十一部分　总结
第34章　总结：已知与未知的财务理论 866
34.1　已知的财务理论：七个最重要的财务理念 866
34.2　未知的财务理论：十个待解决的财务问题 869
34.3　结束语 875
附录　部分练习题答案 876
Contents
IPart OneValue
1 Goals and Governance of the Firm1
1-1 Corporate Investment and Financing Decisions2
Investment Decisions/Financing Decisions/What Is a Corporation?
1-2 The Role of the Financial Manager and the Opportunity Cost of Capital6
The Investment Trade-off
1-3 Goals of the Corporation9
Shareholders Want Managers to Maximize Market Value/A Fundamental Result/Should Managers Look After the Interests of Their Shareholders?/Should Firms Be Managed for Shareholders or All Stakeholders?
1-4 Agency Problems and Corporate Governance12
Pushing Subprime Mortgages: Value Maximization Run Amok, or an Agency Problem?/Agency Problems Are Mitigated by Good Systems of Corporate Governance
Summary15爼燩roblem Sets16爼燗ppendix: Foundations of the Net Present Value Rule18
2 How to Calculate Present Values20
2-1 Future Values and Present Values21
Calculating Future Values/Calculating Present Values/Calculating the Present Value of an Investment Opportunity/Net Present Value/Risk and Present Value/Present Values and Rates of Return/Calculating Present Values When There Are Multiple Cash Flows/The Opportunity Cost of Capital
2-2 Looking for Shortcuts桺erpetuities and Annuities27
How to Value Perpetuities/How to Value Annuities/PV Annuities Due/Calculating Annual Payments/ Future Value of an Annuity
2-3 More Shortcuts桮rowing Perpetuities and Annuities33
Growing Perpetuities/Growing Annuities
2-4 How Interest Is Paid and Quoted35
Continuous Compounding
Summary39爼燩roblem Sets39
3 Valuing Bonds45
3-1 Using the Present Value Formula to Value Bonds46
A Short Trip to Paris to Value a Government Bond/Back to the United States: Semiannual Coupons and Bond Prices
3-2 How Bond Prices Vary with Interest Rates49
Duration and Volatility
3-3 The Term Structure of Interest Rates53
Spot Rates, Bond Prices, and the Law of One Price/Measuring the Term Structure/Why the Discount Factor Declines as Futurity Increases梐nd a Digression on Money Machines
3-4 Explaining the Term Structure57
Expectations Theory of the Term Structure/Introducing Risk/Inflation and Term Structure
3-5 Real and Nominal Rates of Interest59
Indexed Bonds and the Real Rate of Interest/What Determines the Real Rate of Interest?/Inflation and Nominal Interest Rates
3-6 Corporate Bonds and the Risk of Default65
Corporate Bonds Come in Many Forms
Summary68爼燜urther Reading69牋Problem Sets69
4 The Value of Common Stocks74
4-1 How Common Stocks Are Traded75
4-2 How Common Stocks Are Valued76
Valuation by Comparables/The Determinants of Stock Prices/Today抯 Price/But What Determines Next Year抯 Price?
4-3 Estimating the Cost of Equity Capital81
Using the DCF Model to Set Gas and Electricity Prices/Dangers Lurk in Constant-Growth Formulas
4-4 The Link Between Stock Price and Earnings per Share87
Calculating the Present Value of Growth Opportunities for Fledgling Electronics
4-5 Valuing a Business by Discounted Cash Flow90
Valuing the Concatenator Business/Valuation Format/Estimating Horizon Value/A Further Reality Check
Summary94爼燜urther Reading95Problem Sets95爼燤ini-Case: Reeby Sports99
5 Net Present Value and Other Investment Criteria101
5-1 A Review of the Basics101
Net Present Value抯 Competitors/Three Points to Remember about NPV/NPV Depends on Cash Flow, Not on Book Returns
5-2 Payback105
Discounted Payback
5-3 Internal (or Discounted-Cash-Flow) Rate of Return107
Calculating the IRR/The IRR Rule/Pitfall 1桳ending or Borrowing?/Pitfall 2桵ultiple Rates of Return/Pitfall 3桵utually Exclusive Projects/Pitfall 4梂hat Happens When There Is More Than One Opportunity Cost of Capital?/The Verdict on IRR
5-4 Choosing Capital Investments When Resources Are Limited115
An Easy Problem in Capital Rationing/Uses of Capital Rationing Models
Summary119爼燜urther Reading120
Problem Sets120Mini-Case: Vegetron抯 CFO Calls Again124
6 Making Investment Decisions with the Net Present Value Rule127
6-1 Applying the Net Present Value Rule128
Rule 1: Only Cash Flow Is Relevant/Rule 2: Estimate Cash Flows on an Incremental Basis/Rule 3: Treat Inflation Consistently
6-2 Example桰M&C扴 Fertilizer Project132
Separating Investment and Financing Decisions/Investments in Working Capital/A Further Note on Depreciation/A Final Comment on Taxes/Project Analysis/Calculating NPV in Other Countries and Currencies
6-3 Investment Timing140
6-4 Equivalent Annual Cash Flows141
Investing to Produce Reformulated Gasoline at California Refineries/Choosing Between Long- and Short-Lived Equipment/Equivalent Annual Cash Flow and Inflation/ Equivalent Annual Cash Flow and Technological Change/Deciding When to Replace an Existing Machine
Summary146爼燩roblem Sets146Mini-Case: New Economy Transport (A) and (B)153
IPart TwoRisk
7 Introduction to Risk and Return156
7-1 Over a Century of Capital Market History in One Easy Lesson156
Arithmetic Averages and Compound Annual Returns/Using Historical Evidence to Evaluate Today抯 Cost of Capital/Dividend Yields and the Risk Premium
7-2 Measuring Portfolio Risk163
Variance and Standard Deviation/Measuring Variability/How Diversification Reduces Risk
7-3 Calculating Portfolio Risk170
General Formula for Computing Portfolio Risk/Limits to Diversification
7-4 How Individual Securities Affect Portfolio Risk174
Market Risk Is Measured by Beta/Why Security Betas Determine Portfolio Risk
7-5 Diversification and Value Additivity177
Summary178爼燜urther Reading179 Problem Sets179
8 Portfolio Theory and the Capital Asset Model Pricing185
8-1 Harry Markowitz and the Birth of Portfolio Theory185
Combining Stocks into Portfolios/We Introduce Borrowing and Lending
8-2 The Relationship between Risk and Return192
Some Estimates of Expected Returns/Review of the Capital Asset Pricing Model/What If a Stock Did Not Lie on the Security Market Line?
8-3 Validity and Role of the Capital Asset Pricing Model195
Tests of the Capital Asset Pricing Model/Assumptions behind the Capital Asset Pricing Model
8-4 Some Alternative Theories199
Arbitrage Pricing Theory/A Comparison of the Capital Asset Pricing Model and Arbitrage Pricing Theory/The Three-Factor Model
Summary203爼燜urther Reading204
Problem Sets204Mini-Case: John and Marsha on Portfolio Selection211
9 Risk and the Cost of Capital213
9-1 Company and Project Costs of Capital214
Perfect Pitch and the Cost of Capital/Debt and the Company Cost of Capital
9-2 Measuring the Cost of Equity217
Estimating Beta/The Expected Return on Union Pacific Corporation抯 Common Stock/ Union Pacific抯 After-Tax Weighted-Average Cost of Capital/Union Pacific抯 Asset Beta
9-3 Analyzing Project Risk221
What Determines Asset Betas?/Don抰 Be Fooled by Diversifiable Risk/Avoid Fudge Factors in Discount Rates/Discount Rates for International Projects
9-4 Certainty Equivalents桝nother Way to Adjust for Risk227
Valuation by Certainty Equivalents/When to Use a Single Risk-Adjusted Discount Rate for Long-Lived Assets/A Common Mistake/When You Cannot Use a Single Risk-Adjusted Discount Rate for Long-Lived Assets
Summary232爼燜urther Reading233 Problem Sets233Mini-Case: The Jones Family, Incorporated237
IPart ThreeBest Practices in Capital Budgeting
10 Project Analysis240
10-1 The Capital Investment Process241
Project Authorizations梐nd the Problem of Biased Forecasts/Postaudits
10-2 Sensitivity Analysis243
Value of Information/Limits to Sensitivity Analysis/Scenario Analysis/Break-Even Analysis/Operating Leverage and the Break-Even Point
10-3 Monte Carlo Simulation249
Simulating the Electric Scooter Project
10-4 Real Options and Decision Trees253
The Option to Expand/The Option to Abandon/Production Options/Timing Options/More on Decision Trees/Pro and Con Decision Trees
Summary260爼燜urther Reading261
Problem Sets262
Mini-Case: Waldo County266
11 Investment, Strategy, and Economic Rents268
11-1 Look First to Market Values268
The Cadillac and the Movie Star
11-2 Economic Rents and Competitive Advantage273
11-3 Marvin Enterprises Decides to Exploit a New Technology: an Example276
Forecasting Prices of Gargle Blasters / The Value of Marvin抯 New Expansion / Alternative Expansion Plans / The Value of Marvin Stock / The Lessons of Marvin Enterprises
Summary283爼燜urther Reading284Problem Sets284
Mini-Case: Ecsy-Cola289
12 Agency Problems, Compensation, and Performance Measurement290
12-1 Incentives and Compensation290
Agency Problems in Capital Budgeting/ Monitoring/Management Compensation/Incentive Compensation
12-2 Measuring and Rewarding Performance: Residual Income and EVA298
Pros and Cons of EVA
12-3 Biases in Accounting Measures of Performance301
Example: Measuring the Profitability of the Nodhead Supermarket/Measuring Economic Profitability/Do the Biases Wash Out in the Long Run?/What Can We Do about Biases in Accounting Profitability Measures?/Earnings and Earnings Targets
Summary307爼燜urther Reading307Problem Sets308
IPart FourFinancing Decisions and Market Efficiency
13 Efficient Markets and Behavioral Finance312
13-1 We Always Come Back to NPV313
Differences between Investment and Financing Decisions
13-2 What Is an Efficient Market?314
A Startling Discovery: Price Changes Are Random/Three Forms of Market Efficiency/Efficient Markets: The Evidence
13-3 The Evidence against Market Efficiency321
Do Investors Respond Slowly to New Information?/Bubbles and Market Efficiency
13-4 Behavioral Finance326
Limits to Arbitrage/Incentive Problems and the Subprime Crisis
13-5 The Six Lessons of Market Efficiency329
Lesson 1: Markets Have No Memory/Lesson 2: Trust Market Prices/Lesson 3: Read the Entrails/Lesson 4: There Are No Financial Illusions/Lesson 5: The Do-It-Yourself Alternative/Lesson 6: Seen One Stock, Seen Them All/What if Markets Are Not Efficient? Implications for the Financial Manager
Summary335爼燜urther Reading336Problem Sets337
14 An Overview of Corporate Financing341
14-1 Patterns of Corporate Financing341
Do Firms Rely Too Much on Internal Funds?/How Much Do Firms Borrow?
14-2 Common Stock345
Ownership of the Corporation/Voting Procedures/Dual-class Shares and Private Benefits/Equity in Disguise/Preferred Stock
14-3 Debt351
Debt Comes in Many Forms/A Debt by Any Other Name/Variety抯 the Very Spice of Life
14-4 Financial Markets and Institutions354
The Financial Crisis of 2007?009/The Role of Financial Institutions
Summary357爼燜urther Reading358Problem Sets359
15 How Corporations Issue Securities362
15-1 Venture Capital362
The Venture Capital Market
15-2 The Initial Public Offering366
Arranging an Initial Public Offering/The Sale of Marvin Stock/The Underwriters/Costs of a New Issue/Underpricing of IPOs/Hot New-Issue Periods
15-3 Alternative Issue Procedures for IPOs375
Types of Auction: A Digression
15-4 Security Sales by Public Companies376
General Cash Offers/International Security Issues/The Costs of a General Cash Offer/Market Reaction to Stock Issues/Rights Issues
15-5 Private Placements and Public Issues381
Summary382爼燜urther Reading383Problem Sets383 Appendix: Marvin抯 New-Issue Prospectus387
IPart FivePayout Policy and Capital Structure
16 Payout Policy391
16-1 Facts about Payout391
16-2 How Firms Pay Dividends and Repurchase Stock392
How Firms Repurchase Stock
16-3 How Do Companies Decide on Payouts?394
16-4 The Information in Dividends and Stock Repurchases395
The Information Content of Share Repurchases
16-5 The Payout Controversy397
Dividend Policy Is Irrelevant in Perfect Capital Markets/Dividend Irrelevance桝n Illustration/Calculating Share Price/Stock Repurchase/Stock Repurchase and Valuation
16-6 The Rightists402
Payout Policy, Investment Policy, and Management Incentives
16-7 Taxes and the Radical Left404
Why Pay Any Dividends at All?/Empirical Evidence on Dividends and Taxes/The Taxation of Dividends and Capital Gains/Alternative Tax Systems
16-8 The Middle-of-the-Roaders409
Payout Policy and the Life Cycle of the Firm
Summary411爼燜urther Reading412Problem Sets412
17 Does Debt Policy Matter?418
17-1 The Effect of Financial Leverage in a Competitive Tax-free Economy419
Enter Modigliani and Miller/The Law of Conservation of Value/An Example of Proposition 1
17-2 Financial Risk and Expected Returns424
Proposition 2/How Changing Capital Structure Affects Beta
17-3 The Weighted-Average Cost of Capital428
Two Warnings/Rates of Return on Levered Equity桾he Traditional Position/Today抯 Unsatisfied Clienteles Are Probably Interested in Exotic Securities/Imperfections and Opportunities
17-4 A Final Word on the After-Tax Weighted-Average Cost of Capital433
Summary434爼燜urther Reading434Problem Sets435
18 How Much Should a Corporation Borrow?440
18-1 Corporate Taxes440
How Do Interest Tax Shields Contribute to the Value of Stockholders?Equity?/Recasting Merck抯 Capital Structure/MM and Taxes
18-2 Corporate and Personal Taxes444
18-3 Costs of Financial Distress447
Bankruptcy Costs/Evidence on Bankruptcy Costs/Direct versus Indirect Costs of Bankruptcy/Financial Distress without Bankruptcy/Debt and Incentives/Risk Shifting: The First Game/Refusing to Contribute Equity Capital: The Second Game/And Three More Games, Briefly/What the Games Cost/Costs of Distress Vary with Type of Asset/The Trade-off Theory of Capital Structure
18-4 The Pecking Order of Financing Choices460
Debt and Equity Issues with Asymmetric Information/ Implications of the Pecking Order/The Trade-off Theory vs. the Pecking-Order Theory桽ome Recent Tests/The Bright Side and the Dark Side of Financial Slack/Is There a Theory of Optimal Capital Structure?
Summary465爼燜urther Reading466Problem Sets467
19 Financing and Valuation471
19-1 The After-Tax Weighted-Average Cost of Capital471
Review of Assumptions
19-2 Valuing Businesses475
Valuing Rio Corporation/Estimating Horizon Value/WACC vs. the Flow-to-Equity Method
19-3 Using WACC in Practice479
Some Tricks of the Trade/Mistakes People Make in Using the Weighted-Average Formula/Adjusting WACC when Debt Ratios and Business Risks Differ/Unlevering and Relevering Betas/The Importance of Rebalancing/The Modigliani朚iller Formula, Plus Some Final Advice
19-4 Adjusted Present Value486
APV for the Perpetual Crusher/Other Financing Side Effects/APV for Businesses/APV for International Investments
19-5 Your Questions Answered490
Summary492爼燜urther Reading493Problem Sets494Appendix: Discounting Safe, Nominal Cash Flows498
IPart SixOptions
20 Understanding Options502
20-1 Calls, Puts, and Shares503
Call Options and Position Diagrams/Put Options/Selling Calls, Puts, and Shares/Position Diagrams Are Not Profit Diagrams
20-2 Financial Alchemy with Options507
Spotting the Option
20-3 What Determines Option Values?513
Risk and Option Values
Summary519爼燜urther Reading519Problem Sets519
21 Valuing Options525
21-1 A Simple Option-Valuation Model525
Why Discounted Cash Flow Won抰 Work for Options/Constructing Option Equivalents from Common Stocks and Borrowing/Valuing the Google Put Option
21-2 The Binomial Method for Valuing Options530
Example: The Two-Stage Binomial Method/The General Binomial Method/The Binomial Method and Decision Trees
21-3 The Black朣choles Formula534
Using the Black朣choles Formula/The Risk of an Option/The Black朣choles Formula and the Binomial Method
21-4 Black朣choles in Action538
Executive Stock Options/Warrants/Portfolio Insurance/Calculating Implied Volatilities
21-5 Option Values at a Glance542
21-6 The Option Menagerie543
Summary544爼燜urther Reading544Problem Sets545 Mini-Case: Bruce Honiball抯 Invention549Appendix: How Dilution Affects Option Value550
22 Real Options554
22-1 The Value of Follow-on Investment Opportunities554
Questions and Answers about Blitzen抯 Mark II/Other Expansion Options
22-2 The Timing Option558
Valuing the Malted Herring Option/Optimal Timing for Real Estate Development
22-3 The Abandonment Option561
The Zircon Subductor Project/Abandonment Value and Project Life/Temporary Abandonment
22-4 Flexible Production566
22-5 Aircraft Purchase Options567
22-6 A Conceptual Problem?569
Practical Challenges
Summary571爼燜urther Reading572Problem Sets572
IPart SevenDebt Financing
23 Credit Risk and the Value of Corporate Debt577
23-1 Yields on Corporate Debt577
What Determines the Yield Spread?
23-2 The Option to Default581
How the Default Option Affects a Bond抯 Risk and Yield/A Digression: Valuing Government Financial Guarantees
23-3 Bond Ratings and the Probability of Default587
23-4 Predicting the Probability of Default588
Credit Scoring/Market-Based Risk Models
23-5 Value at Risk592
Summary594爼燜urther Reading594
Problem Sets595
24 The Many Different Kinds of Debt597
24-1 Domestic Bonds, Foreign Bonds, and Eurobonds598
24-2 The Bond Contract599
Indenture, or Trust Deed/The Bond Terms
24-3 Security and Seniority601
Asset-Backed Securities
24-4 Repayment Provisions603
Sinking Funds/Call Provisions
24-5 Debt Covenants605
24-6 Convertible Bonds and Warrants607
The Value of a Convertible at Maturity/Forcing Conversion/Why Do Companies Issue Convertibles?/Valuing Convertible Bonds/A Variation on Convertible Bonds: The Bond朩arrant Package
24-7 Private Placements and Project Finance612
Project Finance/Project Finance桽ome Common Features/The Role of Project Finance
24-8 Innovation in the Bond Market615
Summary617爼燜urther Reading618Problem Sets619
Mini-Case: The Shocking Demise of Mr. Thorndike623
25 Leasing625
25-1 What Is a Lease?625
25-2 Why Lease?626
Sensible Reasons for Leasing/Some Dubious Reasons for Leasing
25-3 Operating Leases630
Example of an Operating Lease/Lease or Buy?
25-4 Valuing Financial Leases632
Example of a Financial Lease/Who Really Owns the Leased Asset?/Leasing and the Internal Revenue Service/A First Pass at Valuing a Lease Contract/The Story So Far
25-5 When Do Financial Leases Pay?637
Leasing around the World
25-6 Leveraged Leases638
Summary640爼燜urther Reading640Problem Sets641
IPart EightRisk Management
26 Managing Risk645
26-1 Why Manage Risk?645
Reducing the Risk of Cash Shortfalls or Financial Distress/Agency Costs May Be Mitigated by Risk Management/The Evidence on Risk Management
26-2 Insurance648
How BP Changed Its Insurance Strategy
26-3 Reducing Risk with Options651
26-4 Forward and Futures Contracts652
A Simple Forward Contract/Futures Exchanges/The Mechanics of Futures Trading/Trading and Pricing Financial Futures Contracts/Spot and Futures Prices桟ommodities/More about Forward Contracts/Homemade Forward Rate Contracts
26-5 Swaps660
Interest Rate Swaps/Currency Swaps/Total Return Swaps
26-6 How to Set Up a Hedge664
26-7 Is 揇erivative?A Four-Letter Word?666
Summary668爼燜urther Reading669Problem Sets670
27 Managing International Risks676
27-1 The Foreign Exchange Market676
27-2 Some Basic Relationships678
Interest Rates and Exchange Rates/The Forward Premium and Changes in Spot Rates/Changes in the Exchange Rate and Inflation Rates/Interest Rates and Inflation Rates/Is Life Really That Simple?
27-3 Hedging Currency Risk687
Transaction Exposure and Economic Exposure
27-4 Exchange Risk and International Investment Decisions690
The Cost of Capital for International Investments/Do Some Countries Have a Lower Interest Rate?
27-5 Political Risk694
Summary696爼燜urther Reading697Problem Sets698爼燤ini-Case: Exacta, s.a.702
IPart NineFinancial Planning and Working Capital Management
28 Financial Analysis704
28-1 Financial Statements704
28-2 Lowe抯 Financial Statements705
The Balance Sheet/The Income Statement
28-3 Measuring Lowe抯 Performance708
Economic Value Added (EVA)/Accounting Rates of Return/Problems with EVA and Accounting Rates of Return
28-4 Measuring Efficiency713
28-5 Analyzing the Return on Assets: the Du Pont System714
The Du Pont System
28-6 Measuring Leverage716
Leverage and the Return on Equity
28-7 Measuring Liquidity718
28-8 Interpreting Financial Ratios720
Summary724爼燜urther Reading724Problem Sets725
29 Financial Planning731
29-1 Links between Short-Term and Long-Term Financing Decisions731
29-2 Tracing Changes in Cash734
The Cash Cycle
29-3 Cash Budgeting737
Preparing the Cash Budget: Inflows/Preparing the Cash Budget: Outflows
29-4 The Short-Term Financing Plan740
Options for Short-Term Financing/Dynamic抯 Financing Plan/Evaluating the Plan/A Note on Short-Term Financial Planning Models
29-5 Long-term Financial Planning743
Why Build Financial Plans?/A Long-Term Financial Planning Model for Dynamic Mattress/ Pitfalls in Model Design/Choosing a Plan
29-6 Growth and External Financing748
Summary749爼燜urther Reading750Problem Sets750
30 Working Capital Management757
30-1 Inventories758
30-2 Credit Management760
Terms of Sale/The Promise to Pay/Credit Analysis/The Credit Decision/Collection Policy
30-3 Cash766
How Purchases Are Paid For/Speeding up Check Collections/International Cash Management/Paying for Bank Services
30-4 Marketable Securities771
Calculating the Yield on Money-Market Investments/ Yields on Money-Market Investments/The International Money Market/Money-Market Instruments
30-5 Sources of Short-Term Borrowing777
Bank Loans/Commercial Paper/Medium-Term Notes
Summary782爼燜urther Reading784Problem Sets784
IPart TenMergers, Corporate Control, and Governance
31 Mergers792
31-1 Sensible Motives for Mergers792
Economies of Scale/Economies of Vertical Integration/Complementary Resources/Surplus Funds/Eliminating Inefficiencies/Industry Consolidation
31-2 Some Dubious Reasons for Mergers798
Diversification/Increasing Earnings per Share: The Bootstrap Game/Lower Financing Costs
31-3 Estimating Merger Gains and Costs801
Right and Wrong Ways to Estimate the Benefits of Mergers/More on Estimating Costs梂hat If the Target抯 Stock Price Anticipates the Merger?/Estimating Cost When the Merger Is Financed by Stock/Asymmetric Information
31-4 The Mechanics of a Merger805
Mergers, Antitrust Law, and Popular Opposition/The Form of Acquisition/Merger Accounting/Some Tax Considerations
31-5 Proxy Fights, Takeovers, and the Market for Corporate Control808
Proxy Contests/Takeovers/Oracle Bids for PeopleSoft/Takeover Defenses/Who Gains Most in Mergers?
31-6 Mergers and the Economy814
Merger Waves/Do Mergers Generate Net Benefits?
Summary816爼燜urther Reading817Problem Sets817爼燗ppendix: Conglomerate Mergers and Value Additivity820
32 Corporate Restructuring822
32-1 Leveraged Buyouts822
RJR Nabisco/Barbarians at the Gate?/Leveraged Restructurings/LBOs and Leveraged Restructurings
32-2 Fusion and Fission in Corporate Finance827
Spin-offs/Carve-outs/Asset Sales/Privatization and Nationalization
32-3 Private Equity831
Private-Equity Partnerships/Are Private-Equity Funds Today抯 Conglomerates?
32-4 Bankruptcy837
Is Chapter 11 Efficient?/Workouts/Alternative Bankruptcy Procedures
Summary842爼燜urther Reading843Problem Sets844
33 Governance and Corporate Control Around the World846
33-1 Financial Markets and Institutions846
Investor Protection and the Development of Financial Markets
33-2 Ownership, Control, and Governance851
Ownership and Control in Japan/Ownership and Control in Germany/European Boards of Directors/Ownership and Control in Other Countries/Conglomerates Revisited
33-3 Do These Differences Matter?859
Risk and Short-termism/Growth Industries and Declining Industries/Transparency and Governance
Summary863爼燜urther Reading864Problem Sets864
IPart ElevenConclusion
34 Conclusion: What We Do and Do not Know about Finance866
34-1 What We Do Know: The Seven Most Important Ideas in Finance866
1. Net Present Value/2. The Capital Asset Pricing Model/3. Efficient Capital Markets/4. Value Additivity and the Law of Conservation of Value/5. Capital Structure Theory/6. Option Theory/7. Agency Theory
34-2 What We Do Not Know: 10 Unsolved Problems in Finance869
1. What Determines Project Risk and Present Value?/2. Risk and Return梂hat Have We Missed?/3. How Important Are the Exceptions to the Efficient-Market Theory?/4. Is Management an Off-Balance-Sheet Liability?/5. How Can We Explain the Success of New Securities and New Markets?/6. How Can We Resolve the Payout Controversy?/7. What Risks Should a Firm Take?/8. What Is the Value of Liquidity?/9. How Can We Explain Merger Waves?/10. Why Are Financial Systems So Prone to Crisis?
34-3 A Final Word875
Appendix: Answers to Select Basic Problems876