Preface.
Acknowledgments.
Chapter 1 What is Finance?
Capital Markets & Capital Market Theory.
Financial Management.
Investment management.
Organization of this book.
The Bottom Line.
Questions.
Part One: The Financial System.
Chapter 2 Financial Instruments, Markets, and Intermediaries.
The financial system.
The Role of Financial Markets.
The role of financial intermediaries.
Types of financial markets.
The Bottom Line.
Questions.
Chapter 3 The Financial System’s Cast of Characters.
Domestic nonfinancial sectors.
Nonfinancial businesses.
Domestic financial sectors.
The foreign sector.
The Bottom Line.
Questions.
Part Two: Financial Management.
Chapter 4 Financial Statements.
Accounting principles: What are they?
The basic financial statements.
How are the statements related?
Why bother about the footnotes?
Accounting flexibility.
U.S. accounting v. outside of the U.S.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 5 Business Finance.
Forms of business enterprise.
The objective of financial management.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 6 Financial Strategy and Financial Planning.
Strategy and value.
The budgeting process.
Budgeting.
Performance evaluation.
Strategy and value creation.
The Bottom Line.
Questions.
Chapter 7 Dividend and Dividend Policies.
Dividends.
Stock distributions.
Dividend policy.
Stock repurchases.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 8 The Corporate Financing Decision.
Debt v. equity.
Financial leverage and risk.
Financial distress.
The cost of capital.
Optimal capital structure: Theory and practice.
The Bottom Line.
Solutions to Try It! Problems.
Questions.
Chapter 9 Investment Management.
Setting investment objectives.
Establishing an investment policy.
Constructing and monitoring a portfolio.
Measuring and evaluating performance.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Part Three: Valuation and Analysis Tools.
Chapter 10 Time Value of Money.
Why the time value of money?
Calculating the future value.
Calculating a present value.
Determining the unknown interest rate.
The time value of a series of cash flows.
Annuities.
Loan amortization.
Interest rates and yields.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 11 Financial Ratio Analysis.
Classifying financial ratios.
Liquidity.
Profitability ratios.
Activity ratios.
Financial leverage.
Return on investment.
The Du Pont system.
Common-size analysis.
Using financial ratio analysis.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 12 Cash Flow Analysis.
Difficulties with measuring Cash Flow.
Free cash flow.
Usefulness of cash flows analysis.
Ratio analysis.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 13 Capital Budgeting.
Investment decisions and owners' wealth.
The capital budgeting process.
Determining cash flows from investments.
Capital budgeting techniques.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Part Four: Investments.
Chapter 14 The World of Derivatives.
Futures and forward contracts.
Options.
Swaps.
The Bottom Line.
Appendix: Black-Scholes option pricing model.
Solutions to Try it! Problems.
Questions.
Chapter 15 Financial Risk Management.
The definition of risk.
Enterprise risk management.
Managing risks.
The Bottom Line.
Questions.
Chapter 16 The Theory of Portfolio Selection.
Some basic concepts.
Estimating a portfolio's expected return.
Measuring portfolio risk.
Portfolio diversification.
Choosing a portfolio of risky assets.
Behavioral finance and portfolio theory.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 17 Asset Pricing Theory: The Capital Asset Pricing Model.
Characteristics of an asset pricing model.
Overview of the capital asset pricing model.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 18 The Structure of Interest Rates.
The base interest rate.
The term structure of interest rates.
Term structure of interest rates theories.
Swap rate yield curve.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 19 Valuing Common Stock.
Discounted cash flow models.
Relative valuation methods.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Chapter 20 Valuing Bonds.
Valuing a bond.
Conventional yield measures.
Valuing bonds that have embedded options.
The Bottom Line.
Solutions to Try it! Problems.
Questions.
Appendix: Solutions to End of Chapter Questions and Problems.
Glossary.
About the Authors.
Index.
