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| Preface | |
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| About the Authors | |
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| Background | |
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| What is Finance? | |
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| Capital Markets and Capital Market Theory | |
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| Financial Management | |
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| Investment Management | |
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| Summary | |
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| Mathematics of Finance | |
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| The Importance of the Time Value of Money | |
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| Determining the Future Value | |
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| Determining the Present Value | |
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| Determining the Unknown Interest Rate | |
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| Determining the Number of Compounding Periods | |
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| The Time Value of a Series of Cash Flows | |
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| Valuing Cash Flows with Different Time Patterns | |
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| Loan Amortization | |
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| The Calculation of Interest Rates and Yields | |
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| Principles of Valuation | |
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| Summary | |
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| Basics of Financial Analysis | |
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| Financial Ration Analysis | |
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| Cash Flow Analysis | |
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| Usefulness of Cash Flows in Financial Analysis | |
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| Summary | |
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| Capital Markets and Capital Market Theory | |
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| The Financial System | |
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| Financial Assets/Financial Instruments | |
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| Financial Markets | |
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| Financial Intermediaries | |
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| Regulators of Financial Actitivies | |
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| Classification of Financial Markets | |
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| Market Participants | |
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| Summary | |
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| References | |
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| Interest Rate Determination and the Structure of Interest Rates | |
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| Theories About Interest Rate Determination | |
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| The Federal Reserve System and the Determination of Interest Rates | |
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| The Structure of Interest Rates | |
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| Term Structure of Interest Rates | |
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| Summary | |
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| References | |
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| Basics of Derivatives | |
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| Futures and Forward Contracts | |
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| Options | |
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| Swaps | |
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| Cap and Floor Agreements | |
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| Summary | |
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| Appendix: Black-Scholes Option Pricing Model | |
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| References | |
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| Asset Valuation: Basic Bond and Stock Valuation Models | |
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| Valuing Bonds | |
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| Valuation of Common Stock Using Dividend Discount Models | |
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| Summary | |
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| Appendix: Valuing Convertible Bonds | |
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| References | |
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| Asset Valuation: The Theory of Asset Pricing | |
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| Characteristics of an Asset Pricing Model | |
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| Capital Asset Pricing Model | |
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| Arbitrage Pricing Theory Model | |
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| Summary | |
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| References | |
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| Financial Management | |
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| Financial Management | |
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| Forms of Business Enterprise | |
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| The Objective of Financial Management | |
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| The Agency Relationship | |
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| Dividend and Dividend Policies | |
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| Special Considerations in International Financial Management | |
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| Summary | |
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| References | |
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| Financial Strategy and Financial Planning | |
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| Strategy and Value | |
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| Financial Planning and Budgeting | |
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| Importance of Financial Planning | |
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| Budgeting Process | |
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| Sales Forecasting | |
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| Seasonal Considerations | |
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| Budgeting | |
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| Pro Forma Financial Statements | |
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| Long-Term Financial Planning | |
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| Financial Modeling | |
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| Performance Evaluation | |
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| Strategy and Value Creation | |
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| Summary | |
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| References | |
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| The Corporate Financing Decision | |
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| Debt vs. Equity | |
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| The concept of leverage | |
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| Capital Structure and Financial Leverage | |
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| Financial Leverage and Risk | |
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| Capital Structure and Taxes | |
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| Capital Structure and Financial Distress | |
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| The Cost of Capital | |
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| The Agency Relationship and Capital Structure | |
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| Optimal Capital Structure: Theory and Practice | |
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| A Capital Structure Prescription | |
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| Summary | |
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| Appendix: Capital structure: Lessons from Modigliani and Miller | |
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| References | |
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| Financial Engineering, Asset Securitization, and Project Financing | |
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| Creation of Structured Notes | |
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| Asset Securitization | |
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| Project Financing | |
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| Summary | |
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| References | |
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| Capital Budgeting: Process and Cash Flow Estimation | |
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| Investment Decisions and Owners' Wealth Maximization | |
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| Capital Budgeting Process | |
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| Classifying Investment Projects | |
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| Estimating Cash Flows of Capital Budgeting Projects | |
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| Summary | |
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| References | |
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| Capital Budgeting Techniques | |
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| Evaluation Techniques | |
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| Net Present Value | |
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| Profitability Index | |
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| Internal Rate of Return | |
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| Modified Internal Rate of Return | |
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| Payback Period | |
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| Discounted Payback Period | |
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| Issues in Capital Budgeting | |
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| Comparing Techniques | |
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| Capital Budgeting Techniques in Practice | |
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| Capital Budgeting and the Justification of New Technology | |
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| Incorporating Risk into Capital Budgeting Analysis | |
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| Summary | |
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| References | |
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| Managing Current Assets | |
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| Management of Cash and Marketable Securities | |
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| Cash Management | |
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| Marketable Securities | |
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| Management of Accounts Receivable | |
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| Inventory Management | |
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| Summary | |
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| References | |
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| Financial Risk Management | |
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| Risk Defined | |
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| Enterprise Risk Management | |
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| Managing Risks | |
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| Risk Transfer | |
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| Summary | |
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| References | |
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| Investment Management | |
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| The Basic Principles of Investment Management | |
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| The Investment Management Process | |
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| The Theory of Portfolio Selection | |
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| Tracking Error | |
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| Measuring and Evaluating Performance | |
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| Summary | |
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| References | |
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| Equity Portfolio Management | |
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| Stock Market Indicators | |
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| Top-Down vs. Bottom-up Approaches | |
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| Fundamental vs. Technical Analysis | |
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| Popular Stock Market Strategies | |
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| Passive Strategies | |
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| Equity-Style Management | |
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| Types of Stock Market Structures | |
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| The U.S. Stock Markets: Exchanges and OTC Markets | |
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| Trading Mechanics | |
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| Summary | |
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| References | |
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| Bond Portfolio Management | |
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| Sectors of the Bond Market | |
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| Features of Bonds | |
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| Yield Measures | |
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| Risks Associated with Investing in Bonds | |
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| Measuring Interest Rate Risk | |
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| Bond Indexes | |
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| Active Bond Portfolio Strategies | |
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| Passive Bond Portfolio Strategies | |
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| Summary | |
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| References | |
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| Use of Stock Index Futures and Treasury Futures Contracts in Portfolio Management | |
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| Using Stock Index Futures in Equity Portfolio Management | |
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| Using Treasury Bond and Note Futures Contracts in Bond Portfolio Management | |
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| Using Stock Index Futures and Treasury Bond Futures to Implement an Asset Allocation Decision | |
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| Summary | |
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| References | |
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| Use of Options in Portfolio Management | |
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| Using Stock Options and Index Options in Equity Portfolio Management | |
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| Using Interest Rate Options in Bond Portfolio Management | |
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| Summary | |
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| Appendix: Pricing Models on Options on Physicals and Futures Options | |
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| References | |
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| Index | |