- A 1C Business School vs Practice
- A 2A Art or Science
- A 3B Interesting Current Academic Research
- A 3C Getting Involved in Academic Research
- A 3G The Best Finance Journals
- A 4 Bon Voyage
- A A Basic Introduction
- A A List of Some Recent Empirical Capital Structure Related Publications
- A A Short Cut Formula For the Risk of a Portfolio
- Agency Issues
- Aggregate Investor Preferences Only Risk and Reward
- An Example In a Risk Averse World In Which Riskier Securities Must Offer Higher Expected Rates of Return
- An Example The Yield Curve in May 2002
- An Investments own Risk is not a Good Measure for Risk Contribution To a Portfolio
- An Opinion What Works and What Does not Work
- An Unbiased Pro Forma
- Application Fixed Rate Mortgage Payments
- BottomUp Example Long Term Accruals Depreciation
- Caution on Blind Trust in Statistical Formulas using Historical Data
- Comprehensive Empirical Study
- Convertible Bonds
- Defining the Inflation Rate
- Definition - 2
- Discount factors and present value PV
- Does It Matter When You Need Cash
- Does Risk Reducing Corporate Diversification or Hedging Create Value
- Doing Accounting
- Expected Return Differences vs Promised Return Differences
- Extracting Forward Interest Rates
- Fiddling with Individual Items
- A Finding The True Value of A Good That is Not Fairly Priced
- First Course in Corporate Finance
- First Look at Investments
- Harmless Simplifications
- History or Future
- How To Stack Your Overall Basket
- How to Work Problems You Have Not Yet Encountered
- Maximization of Equity Value or Firm Value
- Measuring Reward The Expected Rate of Return
- Method 1 Direct Extrapolation of Historical Cash Flows
- More than Two Securities
- Payback and Its Problems
- Perfect Market Assumptions and Violations
- Perpetuity and Annuity Derivations
- Personal Income Tax Differences
- Present Value With State Contingent Payoff Tables
- Project Risk Changes
- A Quick Adoption Checklist For Instructors
- Random Variables and Expected Values
- Reasons for MA
- Risk Neutral Investors Demand Higher Promised Rates
- Sample Application of Tax Adjusted Valuation Techniques
- Sample Final
- Sample Midterm
- Selection of Comparison Firms
- Single Random Variables
- Taxes in Rates of Returns
- The Basics of Federal Income Taxes
- The Cost of Capital
- The Effect of Interest Rate Changes on Short Term and Long Term Bonds
- The Equity Premium [ErM rF
- The FlowToEquity Direct Valuation from the Pro Forma Financials
- The Future Value FV of Money
- The Law of One Price
- The Multi Mechanism Outcome Oriented View
- The Simple Perpetuity Formula
- The Template
- The Tradeoff in the Presence of Financial Distress Costs
- Typical Costs When Trading Real Goods Real Estate
- Underwriting Functions
- Valuation Ratios
- Valuing A Coupon Bond With A Particular Yield Curve
- Valuing Goods Not Priced at Fair Value via Certainty Equivalence
- What Announcement Value Changes Mean
- Which Tax Adjusted Valuation Method is Best
- Working Capital
- A1A Common Student Misconceptions
- A1B Common Faculty Misconceptions
- A1D The Rankings
- A3 Finance Research
- A3D Finance Degrees
- A3E Academic Careers in Finance and Economics A PhD
- Advice
- Alternative Assumptions and Sensitivity Analysis
- An Example of the Entrepreneurs Incentives
- An Introduction to Statistics
- An Introduction to The Tax Code
- An Investors Risk vs Reward Tradeoff
- An NPV Checklist
- And MA
- Anecdote A Conversation with Eugene Fama
- Anecdote A Short History of Bankruptcy
- Anecdote Airlines Unions and Shareholders
- Anecdote An Investment Banking
- Anecdote Are Convertibles Debt or Equity
- Anecdote Are women better investors than men
- Anecdote Board Courage at Citigroup
- Anecdote Bribing Shareholders in Proxy Fights
- Anecdote CalPERS Top10 List
- Anecdote Cost of Capital Expert Witnessing
- Anecdote Creditor Protection Outside the United States
- Anecdote Disclosure Rights Outside the United States
- Anecdote Executive Succession in Action
- Anecdote Fear and Relief Lotus and Chrysler
- Anecdote Fiduciary Responsibility or the Fox guarding the Hen House
- Anecdote Graft in Action Panavision
- Anecdote Great Mathematicians and Gambling The Origin of the Random Walk
- Anecdote How Bond Ratings Doomed Trust Preferred Securities And Created Ecaps
- Anecdote Inflation Adjusting Bonds
- Anecdote Judge Lifland and Eastern Airlines Creditors
- Anecdote Legal Monopolies Bond Ratings
- Anecdote RJR Ego and Overpayment
- Anecdote Solid Financial Analysis
- Anecdote Success in Business Grow up
- Anecdote Tax Reductions for the Needy For Profit Corporations with No Tax Obligations
- Anecdote The Analyst Recommends
- Anecdote The Corporate Governance Consulting Industry
- Anecdote The Next Bubble
- Anecdote The Oldest Institutions and Perpetuities
- Anecdote The RJR Buyout Tax Loophole
- Anecdote The Three Top Investment Books of 1996
- Anecdote Trashy Accounting at Waste Management
- Anecdote What PE ratio to believe
- Annualized Rates of Return
- APV Application to a 6040 Debt Financing Case
- Arbitrage and Great Bets
- Arbitrage The Full Restructuring Takeover Argument
- Arrive at Ebitda earnings before interest and taxes depreciation and amortization Next
- Assembling the Building Blocks into a Real Offering
- Assessing the Magnitude of Direct Bankruptcy Costs
- Assume Is A Market Plot
- B A Calibrated Pro Forma
- B A More Elaborate Example With Probability Ranges
- B A Quickand Dirty Heuristic Tax Savings Rule
- B An Application of the Certainty Equivalence Method The CAPM Cost of Capital For a Non Traded Good
- Application A Level Coupon Bond
- Application How Perfect is the Market for PepsiCo Shares
- Are Faster Growing Firms Better Bargains
- Before Tax vs After Tax Expenses
- Beta Is a Good Measure for Risk Contribution to a Portfolio
- Classifications Of Market Efficiency Beliefs
- Compounding and Future Value
- Compounding With The Yield Curve
- Corporate Finance vs Entrepreneurial or Personal Finance
- Critical Simplifications
- Doing Finance
- Graphing the Mean Variance Efficient Frontier
- Historical Investment Performance of Individual Stocks and Asset Classes
- B IBMs Equity
- Issuance of Bonds of Similar Priority
- Key Questions For Deciding on Strategy
- Measuring Risk The Standard Deviation of the Rate of Return
- Method 2 Detailed Financial Pro Forma Projections
- More Complex Option Valuation in a Risk Neutral World
- More Real World Choices
- Net Present Value NPV
- Non Aggregation of Comparables
- Non Tax Differences
- Non Valuation Diagnostic Financial Ratios
- B Optional Options and Warrants
- Other Bond Features
- Portfolios
- Project Pairs and Externalities
- Publicly Traded Firms in 2003
- Real and Nominal Interest Rates
- Realistic Differential Taxation of Debt and Equity
- Risk Neutrality and Risk Aversion Preview
- Share Repurchase Mechanics
- Shorting and Locking in Forward Interest Rates
- Short Term and Long Term Winners and Losers
- Splitting Project Payoffs into Debt and Equity
- Tax Adjusted Weighted Average Cost of Capital WACC Valuation Theory
- Taxes on Nominal Returns
- Tax Exempt Bonds and the Marginal Investor
- The Corporate Board
- The Cost of Capital Minus the Growth Rate of Cash Flows
- The Growing Perpetuity Formula
- The Marginal Risk Contribution of One
- The Principle Should Be Joint Tax Avoidance
- The Risk Free Rate rF and Multi Year Considerations
- The WACC Formula Without Taxes
- What are the Underlying Reasons for Capital Structure Change
- Where Does the CAPM Work Where Does it
- Why PE Ratios differ
- Background
- Balance Sheet Book Equity Based Multiples Warning
- Basic Background and Definitions
- Basic Capital Structure Patterns of US Firms
- Bondholder Expropriation
- Bribes
- Adding a Risk Free Rate
- Application Projects With Different Lives and Rental Equivalents
- Assessing the Quality of a Pro Forma
- Average and Marginal Tax Rates
- Bond Duration
- Can Investment and Financing Decisions Be Separate
- Computing Market Betas from Rates of Returns
- Corporate Consequences
- Counteracting Forces Against Expropriation
- Covenants Collateral and Credit Rating Agencies
- Decision Trees One Set of Parameters
- Differential Costs of Capital Theory and Practice
- Direct Underwriting Fees and Costs
- Financial Flexibility and Cash Management
- How Bad are Mistakes How Robust Is the Valuation
- How Bad Are Mistakes Never Apply APV and WACC to the Current Cash Flows
- C How Securities Appear and Disappear
- Inflation in Net Present Values
- Initial Public Offerings IPOs
- Interpreting The Average Empirical Evidence For One Company
- Managerial Lessons
- Non Financial Claims
- One More Project Marginal Rather Than Average Contribution
- So Many Returns The Internal Rate of Return the Cost of Capital the Hurdle Rate and the Expected Rate of Return
- Taxes in Net Present Values
- The Arbitrage Pricing Theory An Alternative
- The Fundamentals Based Classification
- The Market Equilibrium The Price of Eggs
- Trailing Twelve Month TTM Figures and Other Adjustments
- Transaction Costs in Returns and Net Present Values
- C US Treasuries
- Yield Curve Shapes
- Call Options
- Capital Budgeting Present Values and Net Present Values
- Capital Structure and Capital Budgeting in a Perfect Market
- Capital Structure Dynamics
- Causes and Consequences of Imperfect Markets
- Caution The Emperors New Clothes
- Coercive Bond Exchange Offers
- Combining WACC with the CAPM
- Comparables and Net Present Value
- Compounding the annualized rate of return over N years yields the total holding period rate of return
- Conceptual Basics
- Corporate Financial Claims
- Corporate Level
- Corporate Perks
- Corporate Policy Changes
- Correct Inputs Page 172
- Cumulative Normal Distribution Table
- Current Liabilities
- Capital Market Pressures Towards the Optimal Capital Structure
- Continuous Compounding
- Covariance Beta and Correlation
- Debt Adjustments For PE Ratios
- Debt and Equity as Contingent Claims
- Dividend and Capital Gains Taxes
- Do You Need Another Valuation or WACC Formula
- Event Studies Can Measure Instant Value Impacts
- Graphical Illustration of Costs of Capital
- Large Shareholders
- Preview Differences in Expected Rates of Return
- Projects With Different Parameters
- Raising Funds Through Other Claims and Means
- Some Imperfect Market Examples
- Strategic Considerations
- Tax Timing
- The Intrinsic Value of Liquidity
- Underwriter Selection
- Dealing With Imperfect Markets
- Debt Protection
- Decomposing Observed Differences in Quoted Rates of Return
- Defensive Strategies
- Direct vs Indirect Costs
- Dividends and Share Repurchases
- Does Fair Pricing of Bond Features Imply Irrelevance
- Does Future Inflation Drive the Yield Curve Slope
- Credit Default Swaps
- If all Securities are more Risky is the Firm more Risky
- Other Taxes
- Summary
- The Legal Environment
- The Pecking Order and Financing Pyramid
- Earnings Management
- Earnings Based Multiples
- Economic Project Cash Flows
- Efficient Markets Classical Finance and Behavioral Finance
- Eggs and Baskets
- Empire Building
- Empirical Evidence
- End of Chapter Problems - 2 3 4 5
- Entrenchment
- Equity Payouts Dividends and Share
- Equity Protection
- Ethical Conflicts
- Executive
- Expected Rates of Return and Market Betas For Weighted Portfolios and Firms
- Expected Typical and Most Likely Scenarios
- Ethics Publicity and Reputation
- The Effect of Debt on Earnings PerShare and Price Earnings Ratios
- The Influence of Stock Returns on Opportunistic Issuing
- Figure 72 Value Under No Flexibility Always Operate The Plant
- Figure 73 Value Under Perfect Flexibility Full Knowledge and Choice
- Figure 74 Value to One YearAhead Information or Ability to Delay Choice Until Year
- Figure 75 Value to Flexible Plant Starting But Not Stopping
- Figure 76 Value to Flexible Plant Stopping But Not Starting Strategy 1 Close at 400
- Figure 77 Value to Flexible Plant Stopping But Not Starting Strategy 2 Run at 400
- Figure 78 Value of a Fixed Cost Technology With Different Parameters
- Figure 79 Value of an Expansion Technology With Different Parameters
- Financial Distress Costs As Transaction Cost
- Financing Policy the Balance Sheet and Linkages
- Firm Value Changes
- Firm Value Under Different Capital Structures
- Formulaic Valuation Methods APV and WACC
- Fraud
- Future Contingencies and Real Options
- Conclusion
- Preview Efficient Markets
- G1 Mechanisms Changing Capital Structure and Firm Scale
- Global History
- Historical Lessons
- How Bad are Mistakes Relative Robustness of CAPM Inputs
- How Bad are Mistakes The Robustness of the NPV Formula
- How do Chief Financial Officers CFOs Decide
- I
- IA Investments Projects and Firms
- IE Do You Always Get What You Pay
- If the Market is Not Efficient
- Risk and the Opportunity Cost of Capital
- Illustration of Differences in Expected Earnings Growth Rates
- Important - 2 3 4
- Important Do all NPV calculations in aftertax money This applies both to the expected cash flow to the opportunity cost of capital
- Important Do not let your company run out of cash 5 6 7 8
- Important Higher inflation rates hurt taxable investors who earn interest income even if real interest rates seem to remain constant This is because the IRS taxes nominal returns not real returns 9 10 11
- Important Paper losses are actual losses 12
- Important The CAPM provides an expected rate of return This return does not include a default premium The probability of default must be handled in the NPV numerator through the expected cash flow and not in the NPV denominator through the expected rate o
- Important The relation between nominal rates of return rnominal real rates of returns Cereal and inflation n is
- Important The Ultimate Project Selection Rule Consider all possible project combinations and select the combination of projects that gives the highest overall NPV
- Important Though fixed income even a Treasury bond does not guarantee a fixed rate of return over horizons shorter than the maturity day to day longterm bonds are generally riskier investments than shortterm bills 13 14 15 16 17
- Important You can only compare projects on a beforetax NPV basis if the tax treatment is absolutely symmetric This requires consideration of your overall tax situation
- Important You must understand 18
- In Perfect Markets Risk Averse Investors May Demand Higher Expected Returns
- Incentive Agency Biases
- Indebtedness Ratios
- Indebtedness Ratios by Industry in 2003
- Inflation
- Inside Information and Adverse Selection
- Insider Trading
- Interest Rates vs Interest Quotes Confusion
- Inventories Current Liabilities are accounts payables bank overdrafts tax payables and
- Investment Bankers
- Investments and Returns
- Investor Choice Risk and Reward
- Investor Demand For the Firm
- Key Terms - 2 3 4 5 6 7
- LA Bonds
- LB Loans and Bonds
- Learning How to Approach New Problems
- Less Fact More Fiction In Theory
- LF Social Value and Surplus
- MA Activity Deal Characteristics and Advi
- Main Index
- Managerial Risk Aversion
- Managerial Temptations
- Market Depth and Transaction Costs
- Market Prices as Puppeteers
- Measures and Components for Small and Large Firms in 2003
- Measuring Risk and Reward
- Mechanisms and Rationales
- Mental Biases
- Mergers and Acquisitions MA
- Methods
- Modigliani and Miller The Formal
- Modigliani and Miller The Informal
- More About Corporate Bonds
- More Agency Conflict
- More Than Two Possible Outcomes
- More Time Value of Money
- Necessary Algebraic Background
- Negative Project Interactions
- Net Debt and Equity Issuing Activity
- Nominal Interest Rate Levels
- Non Financial Liabilities
- Operating Policy Distortions Behavior in Good Times
- Optional The Optimal Portfolio and The Efficient Frontier
- Other Capital Structure Considerations
- Other Financial Ratios
- Other Forces
- Other Liabilities
- Other Observations and Discussion
- Other Premia eg Liquidity Premia and Summary
- Our Pro Forma in Hindsight
- PE Ratios and Earnings Growth Rates For All Firms in December 2000
- PE Ratios and Earnings Growth Rates For Selected Firms in November 2004
- Perpetuities
- Personal Level - 2
- Portfolios Diversification and Investor Preferences
- Positive Project Interactions
- Post Issue Placement and Bond Liquidity
- Present Values With Time Varying Interest Rates
- Pro Forma Financial Statements
- Problems With PE Ratios
- Project Value in Imperfect Markets
- Prominently Used Data Websites
- Proposing Capital Structure Change
- Ratio and Soundness Analysis
- Reflections On The Example Debt and Equity Risk
- Reflections On The Example Payoff Tables
- Reluctance to Liquidate
- Remedies
- S1 S2 S3 V S4
- Sample Exams
- Short Preview Other Event Study Results
- Simplifications and Perspective
- Solve Now 13 Solutions - 2
- Solve Now 14 Solutions - 2
- Solve Now 15 Solutions
- Solve Now 16 Solutions - 2
- Solve Now 2 Solutions
- Solve Now 22 Solutions
- Solve Now 24 Solutions - 2
- Solve Now 27 Solutions
- Solve Now 33 Solutions
- Solve Now 34 Solutions
- Solve Now 36 Solutions
- Solve Now 41 Solutions
- Solve Now 6 Solutions - 2
- Static Capital Structure Summary
- Stocks Bonds and Cash 19702004
- Structures
- Student Heterogeneity - 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
- Summary of Special Cash Flow Stream Formulas 17 18 19 20 21 22 23
- Survey Evidence
- Survey Evidence From CFOs
- Table of Contents
- Takeovers Proxy Contests and Shareholder Resolutions
- The Basic Building Blocks
- The Capital Asset Pricing Model
- The Capital Market Response to Issue and Dividend Announcements
- The Capital Asset Pricing Model Capm A Cookbook Recipe Approach
- The CAPM Cost of Capital in the Present Value Formula Revisiting The Default Premium and Risk Premium
- The Cash Flow Statement
- The Conceptual Basis for the WACC and APV Formula - 2
- The Detailed Projection Phase
- The Economics of Project Interactions
- The Effect of Disagreements
- The Empirical vs the Theoretical Perspective
- The Evidence
- The Expected Building Value
- The Goal and Logic
- The Homemade Restructuring Argument
- The Income Statement Other Components
- The Income Statement Sales
- The Length of the Detailed Projection Period
- The Levered Equity
- The Loan
- The Malevolent Role
- The Managerial Perspective
- The Mean Variance Efficient Frontier and the CAPM Formula
- The One Important Mistake To Avoid
- The Present Value of Growth Opportunities PVGO
- The Price Earnings PE Ratio
- The Process
- The Profitability Index
- The Role of Personal Income Taxes and Clientele Effects
- The State Dependent Rates of Return
- The Terminal Value
- The Time Dimension
- The Time Value of Money
- The Time Value of Money Future Value and Compounding
- The Value of Claims
- The Weighted Average Cost of Capital WACC
- The Yield Curve
- The Yield To Maturity YTM
- Theft
- Theory vs Empirics
- This next songs about spreading risk in a volatile market by diversification
- Time Varying Rates of Return
- Time Varying Rates of Returns Treasury Bonds and The Yield Curve
- TIPS and Short Term Bonds as Inflation Hedges
- To The Instructor
- Todays Players
- Total Net Cash Flows
- Tracking IBMs Capital Structure From 2001 to 2003
- Transaction Costs and Behavioral Explanations
- Transfers
- Uncertainty Default and Risk
- Uncertainty in Capital Budgeting and Debt and Equity
- Underinvestment
- Value Creation and Destruction
- Warrants
- What a fair bet is
- What You Already Know And What You Want To Know
- Which is better
- Why is the Yield Curve not Flat
- Working with Economies of Scale
- Working With Taxes
- You can measure investment risk by the standard deviation of the rate of return on the overall portfolio Note you will not measure the investment risk contribution of individual components inside the portfolio via the standard deviation Details to follow
- Your Problem How to Minimize Total IRS Receipts
- Your Solution Rearranging Clienteles
- Zero Project Interactions