本书在美国被誉为财务金融经理的必读圣经，也是欧美学界共同推崇的难得一见的权威著作！三位作者不但是顶级名校的知名教授，还曾经分别担任过欧洲金融协会和美国金融协会的主席。全书理论阐述严谨，结构简洁清晰，案例丰富有趣，非常适合高校金融、财务会计等专业的学生使用，也可供金融从业人员、企业财务经理在实际经营过程中参考备用。

欧美经典的公司金融教材，更新至12版！
作者均是欧洲金融协会和美国金融协会的前主席！



编辑推荐
第12版我们首次把全书分为基础篇和进阶篇，其中基础篇涵盖五个部分，是初学者接触金融世界的入门读本，内容简洁清晰，更引人入胜。全书最为吸引人的是，它能够帮助读者在不知不觉中充分理解金融理论如何变成实务，更进一步通过诸多案例帮助其解决实际金融财务问题，并最终自然地处在制定金融决策的位置上进行思考和实践。特别地，作者几乎在每一章都设置了Excel应用专栏，为许多金融、财务、会计问题的处理量身定制了小程序，既简单又实用。
本书非常适合高校作为金融相关专业、财务相关专业的本科生、MBA和研究生学习公司金融课程的教材，同时也适合作为金融从业人员、企业财务经理备用的参考和指南用书。

本书描述公司金融的理论和实践。我们几乎无须解释财务经理为什么要掌握他们工作需要的实务知识，但我们必须讲清楚为什么现实的管理者需要掌握理论。
管理者从经验中学习如何应对日常问题，而最优秀的管理者也能够对变化做出反应。要做到这一点，你需要懂比古老的经验法则更多的东西，必须理解公司和金融市场为什么是这样运行的。也就是说，你需要金融理论。
这听起来很吓人吗？不会。好的理论帮助你理解周围世界所发生的一切，当时代变化和需要分析新问题时，帮助你问对问题。好的理论还告诉你哪些事情你不必担心。通过这本书，我们说明管理者如何利用金融理论解释实际问题。
当然，本书中出现的理论不完美，也不完全，没有理论是这样的。存在一些著名的争论，金融经济学家无法达成共识。我们没有掩盖这些争论。我们陈述每一方的观点，并告诉你我们的观点是什么。
本书的很多内容涉及理解财务经理做什么和为什么这么做。我们还阐述了为了增加公司价值，财务经理应该做什么。在需要理论提醒财务经理正在犯错误的地方，我们提出来，同时承认他们这么做可能存在隐藏的理由。简单来说，我们尽力做到公允而不手下留情。
本书可能是你第一次看到现代金融理论世界里的风光，如果是这样，你将第一次读到新思想，理解金融理论如何变成实务。我们希望，你可以时不时地感到愉悦。最终你将处在制定金融决策的位置上，而不只是学习。那时你可以将本书变成参考和指南。
第12版的变动
我们为以前版本的成功感到骄傲，尽力使第12版变得更好。
本书以前版本的使用者将会发现，本书在材料或主题的顺序上没有很大的变化，但我们尽力对全书进行了更新，并使之更易读。很多情况下，变动包括这儿更新一些数据，那儿增加一个新例子。这些增加的内容经常反映了金融市场或公司实践的一些最新进展。例如，你会发现对P2P借贷（第14章）、众筹（第15章）和税收反转（第31章）的简单介绍。
在其他情况下，我们去掉了连续版本更新所累积的混乱。例如，我们删掉了第13章中关于市场有效性的讨论，这是为了更简单一些，也为了反映最新的内容。行为经济学家经常强调投资者情绪对决定股票价格的重要性，因此我们拓展了对行为金融的讨论，包含了情绪的作用，我们用投资者不同水平乐观和悲观的图来说明。第29章和第30章中的短期财务计划和营运资本的讨论是另一个例子，我们重写了其中一些内容，删除了重复的部分。
有些重要的话题比以前版本强调得更多。例如，近期发生的事件强调需要有道德的行为。因此，我们对第1章中道德问题的讨论进行了扩展。有一个倾向是关注把公然的非法行为作为不道德行为的例子，而对大多数公司来说，困难而重要的决策发生在那些灰色区域—野蛮避税、资产剥离和卖空。我们还强调了一个重要问题：不道德的行为只是发生在少数几个公司，还是更有可能是宽容不良行为的商业文化导致的？
另一个值得强调的问题是隐藏杠杆。我们在第14章引入这个主题，在第17章通过瑞比（Reeby）体育公司的设备购置和一个新的小案例，回到这个话题。第18章和第22章，又再次回到这个话题，讨论增长期权所创造的杠杆。
在上一版中，我们通过Beyond the Page或我们称之为App的，增加了数字扩展的内容。这些额外的材料可以使我们脱离纸质出版物的限制，为有需要的读者提供更多的解释，为喜欢挖掘得更深入的读者提供额外的资料。Beyond the Page包括额外的例子和电子表格程序，以及一些有趣的轶事。现在有超过150个App，这一版还增加了很多新的。在本书的电子版中点击一下，就可以无任何障碍地获得这些App，也可以通过URL快捷方式从传统的纸质教材获得。请浏览mhhe.com/brealey12e，获得更多信息。
这些App包括：
第2章　你需要学习如何使用金融计算器吗？Beyond the Page金融计算器App告诉你如何做。
第3章　你想计算债券的久期、了解久期如何预测小的利率变动对债券价格的影响、计算普通股的久期，或者学习如何度量凸性吗？做出图3-2的久期App使你可以做到这些。
第5章　想要更多年金估值的练习吗？一个App提供了例子和练习的机会。
第9章　如何度量美国股票的法玛—弗兰奇三因素模型的贝塔？Beyond the Page贝塔估计App可以实现。
第14章　曾经疑惑过谷歌为什么将股票分为A股和C股吗？一个App提供了答案。
第15章　本章篇幅有限，无法包括真实的IPO招股说明书，你可以通过Beyond the Page看到推特（Twitter）的招股说明书。
第19章　本书简单描述了公司估值的股权现金流方法，而这个方法应用起来有些麻烦。我们提供了一个App指导整个过程。
第20章　布莱克—斯科尔斯公式Beyond the Page应用提供了一个期权计算器，还说明了如何估计期权对输入变量变动的敏感性，以及如何度量期权风险。
第28章　你想看到不同的美国公司最新的财务报表，计算它们的财务比率吗？有个App可以帮你做。
我们认为，有机会增加这些内容和App，将扩大读者可以得到的资料，帮助读者决定探索某个主题的深度。
我们意识到，提出全面而精确的问题与答案，并给予指导是十分重要的。因此，新版付出很多努力来改进习题，并确保答案没有错误。我们增加了章末习题的内容，主要增加的部分在网上。
使学习更容易
本书的每一章都包括介绍性预览、总结和带评注的建议进一步阅读的文献列表。现在，有大量可能进一步阅读的候选文献，我们主要列出了文献调研类的文章或一般性书籍，而没有将所有重要的文章都列进去。我们在脚注中给出了更详细的参考。
每一章后面都有基础题、数字和概念方面的进阶题以及一些挑战题。奇数基础题的答案见本书后面的附录。
在部分必要章节中，我们加入了“网络中的金融”。这部分现在有大量网上项目和新的数据分析问题。这些练习使读者熟悉一些有用的网站，并解释了如何从网上下载和处理数据。
本书还包含了13个章末小案例，这些小案例包括了指导案例分析的具体问题。教师在本书的网站上可以获得小案例的答案。
像Excel这样的电子表格程序，是为很多金融计算量身定做的。有几章包含了专栏，介绍这些最有用的金融函数，并提供简短的练习题。我们说明如何利用Excel功能键来找到这些函数，然后输入数据。我们认为，这种方法比尽力记住每个函数的公式更简单。
我们在本书的文前提供了术语表。
本书的34章分为11个部分：第一部分至第三部分是关于估值和资本投资决策的，包括资产组合理论、资产定价模型和资本成本；第四部分至第八部分讨论股利政策、资本结构、期权（包括实物期权）、公司负债和风险管理；第九部分包括财务分析、财务计划和营运资本管理；第十部分是并购、公司重组和世界范围的公司治理；第十一部分是结论。
我们意识到，教师在教学中希望可以选择主题，也会偏好不同的讲解顺序。因此我们对各章节的写作使得可以按照不同的逻辑顺序来介绍各个主题。例如，在估值和资本投资之前，阅读财务分析和计划这部分内容，应该没有任何困难。
致谢
我们有很多人需要感谢，感谢他们对之前版本的批评，这非常有帮助，感谢他们帮助完成这一版。他们包括：麻省理工学院的Faiza Arshad、Aleijda de Cazenove Balsan、Kedran Garrison、Robert Pindyck、Donna Cheung和Gretchen Slemmons；伦敦商学院的Elroy Dimson、Paul Marsh、Mike Staunton和Stefania Uccheddu；布雷托集团的Lynda Borucki、Marjorie Fischer、Larry Kolbe、Michael Vibert、Bente Villadsen和Fiona Wang。马里兰大学的Alex Triantis；华盛顿大学的Adam Kolasinski；杜克大学的Simon Gervais；国际清算银行的Michael Chui；南加州大学的Pedro Matos；新加坡国立大学的Yupana Wiwattanakantang；北卡罗来纳大学教堂山分校的Mickolay Gantchev；宾夕法尼亚大学的Tina Horowitz、Lin Shen和Chenying Zhang；哈佛大学的Julie Wulf；赛克资本（SAC Capital）的Jinghua Yan；穆迪分析公司（Moody抯 Analytics）的Douglas Dwyer；EVA Dimensions的Bennett Stewart；韬睿咨询（Towers Perrin）的James Matthews。
我们也想感谢那些敬业的专业人员，他们帮助更新了Connect和LearnSmart中的教师资料和网上内容。他们是Kay Johnson、Blaise Roncagli、Deb Bauer、Mishal Rawaf、Marc-Anthony Isaacs、Frank Ryan、Peter Crabb、Victoria Mahan、Nicholas Racculia、Angela Treinen和Kent Ragan。
我们对以下教师表达感激之情，他们富有洞察力的评论和建议在修订过程中起到了不可估量的宝贵作用：
Ibrahim Affaneh Indiana University of Pennsylvania
Neyaz Ahmed University of Maryland
Alexander Amati Rutgers University, New Brunswick
Anne Anderson Lehigh University
Noyan Arsen Koc University
Anders Axvarn Gothenburg University
John Banko University of Florida, Gainesville
Michael Barry Boston University
Jan Bartholdy ASB, Denmark
Penny Belk Loughborough University
Omar Benkato Ball State University
Eric Benrud University of Baltimore
Ronald Benson University of Mary Land, University College
Peter Berman University of New Haven
Tom Boulton Miami University of Ohio
Edward Boyer Temple University
Alon Brav Duke University
Jean Canil University of Adelaide
Robert Carlson Bethany College
Chuck Chahyadi Eastern Illinois University
Fan Chen University of Mississippi
Celtin Ciner University of North Carolina, Wilmington
John Cooney Texas Tech University
Charles Cuny Washington University, St.Louis
John Davenport Regent University
Ray DeGennaro University of Tennessee, Knoxville
Adri DeRidder Gotland University
William Dimovski Deakin University, Melbourne
David Ding Nanyang Technological University
Robert Duvic University of Texas at Austin
Alex Edmans London Business School
Susan Edwards Grand Valley State University
Riza Emekter Robert Morris University
Robert Everett Johns Hopkins University
Dave Fehr Southern New Hampshire University
Donald Flagg University of Tampa
Frank Flanegin Robert Morris University
Zsuzanna Fluck Michigan State University
Connel Fullenkamp Duke University
Mark Garmaise University of California, Los Angeles
Sharon Garrison University of Arizona
Christopher Geczy University of Pennsylvania
George Geis University of Virginia
Stuart Gillan University of Delaware
Felix Goltz Edhec Business School
Ning Gong Melbourne Business School
Levon Goukasian Pepperdine University
Gary Gray Pennsylvania State University
C.J.Green Loughborough University
Mark Griffiths Thunderbird, American School of International Management
Re-Jin Guo University of Illinois, Chicago
Ann Hackert Idaho State University
Winfried Hallerbach Erasmus University, Rotterdam
Milton Harris University of Chicago
Mary Hartman Bentley College
Glenn Henderson University of Cincinnati
Donna Hitscherich Columbia University
Ronald Hoffmeister Arizona State University
James Howard University of Maryland, College Park
George Jabbour George Washington University
Ravi Jagannathan Northwestern University
Abu Jalal Suffolk University
Nancy Jay Mercer University
Thadavillil (Nathan) Jithendranathan University of Saint Thomas
Kathleen Kahle University of Arizona
Jarl Kallberg NYU, Stern School of Business
Ron Kaniel Rochester University
Steve Kaplan University of Chicago
Eric Kelley University of Arizona
Arif Khurshed Manchester Business School
Ken Kim University of Wisconsin, Milwaukee
Jiro Eduoard Kondo Northwestern University Kellogg School of Management
C.R.Krishnaswamy Western Michigan University
George Kutner Marquette University
Dirk Laschanzky University of Iowa
Scott Lee Texas A&M University
Bob Lightner San Diego Christian College
David Lins University of Illinois, Urbana
Brandon Lockhart University of Nebraska, Lincoln
David Lovatt University of East Anglia
Greg Lucado University of the Sciences in Philadelphia
Debbie Lucas Northwestern University
Brian Lucey Trinity College, Dublin
Suren Mansinghka University of California, Irvine
Ernst Maug Mannheim University
George McCabe University of Nebraska
Eric McLaughlin California State University, Pomona
Joe Messina San Francisco State University
Tim Michael University of Houston, Clear Lake
Dag Michalson Bl.Oslo
Franklin Michello Middle Tennessee State University
Peter Moles University of Edinburgh
Katherine Morgan Columbia University
James Nelson East Carolina University
James Owens West Texas A&M University
Darshana Palkar Minnesota State University, Mankato
Claus Parum Copenhagen Business School
Dilip Patro Rutgers University
John Percival University of Pennsylvania
Birsel Pirim University of Illinois, Urbana
Latha Ramchand University of Houston
Rathin Rathinasamy Ball State University
Raghavendra Rau Purdue University
Joshua Raugh University of Chicago
Charu Reheja Wake Forest University
Thomas Rhee California State University, Long Beach
Tom Rietz University of Iowa
Robert Ritchey Texas Tech University
Michael Roberts University of Pennsylvania
Mo Rodriguez Texas Christian University
John Rozycki Drake University
Frank Ryan San Diego State University
Marc Schauten Eramus University
Brad Scott Webster University
Nejat Seyhun University of Michigan
Jay Shanken Emory University
Chander Shekhar University of Melbourne
Hamid Shomali Golden Gate University
Richard Simonds Michigan State University
Bernell Stone Brigham Young University
John Strong College of William & Mary
Avanidhar Subrahmanyam University of California, Los Angeles
Tim Sullivan Bentley College
Shrinivasan Sundaram Ball State University
Chu-Sheng Tai Texas Southern University
Tom Tallerico Dowling College
Stephen Todd Loyola University, Chicago
Walter Torous University of California, Los Angeles
Emery Trahan Northeastern University
Gary Tripp Southern New Hampshire University
Ilias Tsiakas University of Warwick
Narendar V.Rao Northeastern University
David Vang St.Thomas University
Steve Venti Dartmouth College
Joseph Vu DePaul University
John Wald Rutgers University
Chong Wang Naval Postgraduate School
Faye Wang University of Illinois, Chicago
Kelly Welch University of Kansas
Jill Wetmore Saginaw Valley State University
Patrick Wilkie University of Virginia
Matt Will University of Indianapolis
David Williams Texas A&M University, Commerce
Art Wilson George Washington University
Shee Wong University of Minnesota, Duluth
Bob Wood Tennessee Tech University
Fei Xie George Mason University
Minhua Yang University of Central Florida
David Zalewski Providence College
Chenying Zhang University of Pennsylvania
这份名单肯定不全。我们知道，本书在很大程度上归功于我们在伦敦商学院、麻省理工学院斯隆管理学院、伦敦帝国理工学院和宾夕法尼亚大学沃顿商学院的同事们。很多情况下，本书中出现的思想属于他们的和属于我们的同样多。
我们还要感谢麦格劳–希尔教育集团帮助我们出版本书的所有工作人员，他们是品牌经理Chuck Synovec、高级产品开发负责人Noelle Bathurst、市场经理Melissa Caughlin、市场专员Dave O扗onnell、项目经理Kathryn Wright和Kristin Bradley、设计师Laurie Entringer和数字产品分析师Kevin Shanahan。

理查德A.布雷利
斯图尔特C.迈尔斯
弗兰克林·艾伦

财务管理/金融投资

本书是布雷利《公司财务原理》的第12版更新版，也是欧美最为经典的公司金融教材！三位超级作者不但是欧美顶级名校的知名金融学教授，更是欧洲金融学会和美国金融学会的前主席！因此，本书除了在国外诸如哈佛大学、MIT，芝加哥大学等高校使用外，在国内也被清华大学、北京大学、人民大学、复旦大学、上海交通大学、南开大学、天津大学等诸多名校采用。

第12版我们首次把全书分为基础篇和进阶篇，其中基础篇涵盖五个部分，是为初学者接触金融世界的入门读本，内容简洁清晰、更引人入胜。全书最为吸引人的是，它能够帮助读者在不知不觉地充分理解金融理论如何变成实务，更进一步通过诸多案例帮助其解决实际金融财务问题，并最终自然地处在制定金融决策的位置上进行思考和实践。特别地，作者几乎在每一章都设置了Excel应用专栏，为许多金融、财务、会计问题的处理量身定制了小程序，既简单又实用。

本书非常适合高校作为金融相关专业、财务相关专业本科生、MBA和研究生学习公司金融的课程教材，同时也适合那些金融从业人员、企业财务经理作为备用的参考和指南用书。

目　　录
出版说明
导读
关于作者
前言
常用符号
一些有用的公式
术语表
第一部分　价值
第1章　公司金融概览 1
1.1　公司的投资决策和融资决策 2
1.2　公司的财务目标 7
1.3　本书要点简介 13
本章总结 14
练习题 14
附录　股东价值最大化为什么合理 17
第2章　如何计算现值 19
2.1　将来值和现值 19
2.2　寻找捷径—永续年金和年金 27
2.3　更多简化计算—增长的永续年金和年金 34
2.4　利率如何支付和报价 36
本章总结 39
练习题 40
网络中的金融 45
第3章　评估债券价值 46
3.1　利用现值公式评估债券价值 47
3.2　债券价格如何随利率变动 50
3.3　利率期限结构 54
3.4　解释期限结构 58
3.5　实际利率和名义利率 60
3.6　违约风险 64
本章总结 70
扩展阅读 71
练习题 71
网络中的金融 75
第4章　普通股的价值 76
4.1　普通股的交易 76
4.2　普通股的价值评估 78
4.3　估计股权资本成本 85
4.4　股票价格和每股盈利的联系 90
4.5　用贴现现金流评估业务的价值 93
本章总结 98
练习题 99
网络中的金融 103
微型案例　瑞比体育公司 104
第5章　净现值和其他投资准则 105
5.1　基础知识回顾 105
5.2　回收期 109
5.3　内部收益率（贴现现金流收益率） 111
5.4　资源有限时的资本投资选择 119
本章总结 123
扩展阅读 124
练习题 125
微型案例　Vegetron公司的CFO再次拜访 129
第6章　用NPV法则进行投资决策 132
6.1　NPV法则的应用 132
6.2　举例：IM&C肥料项目 139
6.3　利用NPV法则选择项目 146
本章总结 151
练习题 152
微型案例　新经济运输公司（A） 159
微型案例　新经济运输公司（B） 160
第二部分　风险
第7章　风险和收益导论 162
7.1　一个多世纪的资本市场历史：浓缩为简单一课 162
7.2　度量资产组合的风险 169
7.3　计算资产组合的风险 176
7.4　单个证券如何影响资产组合风险 180
7.5　分散化和价值的可加性 184
本章总结 185
扩展阅读 186
练习题 186
网络中的金融 191
第8章　资产组合理论和资本资产定价模型 192
8.1　亨利·马克维茨和资产组合理论的诞生 192
8.2　风险和收益的关系 199
8.3　资本资产定价模型的有效性和作用 202
8.4　其他替代性理论 206
本章总结 211
扩展阅读 212
练习题 212
网络中的金融 218
微型案例　约翰和玛莎的资产组合选择 219
第9章　风险和资本成本 221
9.1　公司和项目的资本成本 222
9.2　股权成本的度量 225
9.3　分析项目风险 229
9.4　确定性等值—调整风险的
　另一个方法 235
本章总结 241
扩展阅读 242
练习题 242
网络中的金融 246
微型案例　琼斯家族有限公司 247
第三部分　资本预算的最佳实践
第10章　项目分析 249
10.1　资本投资过程 250
10.2　敏感性分析 252
10.3　蒙特卡罗模拟 259
10.4　实物期权和决策树 262
本章总结 270
扩展阅读 271
练习题 271
微型案例　沃尔多·康迪 277
第11章　投资、战略和经济租金 279
11.1　先了解市场价值 279
11.2　经济租金和竞争优势 284
11.3　玛文公司决定开发新技术：一个例子 288
本章总结 295
扩展阅读 295
练习题 295
微型案例　Ecsy可乐公司 300
第12章　代理问题、薪酬和业绩评估 302
12.1　激励与薪酬 302
12.2　业绩评估和奖励：剩余收入与EVA 311
12.3　业绩的会计度量的偏差 314
本章总结 320
扩展阅读 321
练习题 322
第四部分　融资决策和市场有效性
第13章　有效市场和行为金融 327
13.1　我们总是回到NPV 328
13.2　有效市场是什么 329
13.3　反对有效市场的证据 336
13.4　行为金融学 340
13.5　有效市场的五个教训 344
本章总结 349
扩展阅读 350
练习题 351
网络中的金融 354
第14章　公司融资综述 355
14.1　公司融资模式 355
14.2　普通股 358
14.3　负债 363
14.4　金融市场和中介 366
14.5　金融市场和中介的作用 372
本章总结 376
扩展阅读 376
练习题 377
网络中的金融 378
第15章　公司如何发行证券 379
15.1　风险资本 379
15.2　首次公开发行 384
15.3　IPO的其他发行程序 392
15.4　上市公司的证券销售 394
15.5　私募和公开发行 399
本章总结 400
扩展阅读 400
练习题 401
网络中的金融 405
附录　玛文新股发行招股说明书 406
第五部分　股利政策和资本结构
第16章　股利政策 410
16.1　关于股利的事实 411
16.2　股利和回购的信息含量 413
16.3　股利还是回购：股利争议 416
16.4　右派 421
16.5　税收和激进的左派 422
16.6　股利政策和公司的生命周期 426
本章总结 429
扩展阅读 430
练习题 430
第17章　负债策略重要吗 436
17.1　在无税的竞争经济中财务杠杆的影响 437
17.2　财务风险和预期收益率 442
17.3　加权平均资本成本 448
17.4　税后加权平均资本成本：结语 452
本章总结 453
扩展阅读 453
练习题 454
微型案例　克拉克斯顿·卓沃尔前来帮忙 458
第18章　公司应该负债多少 460
18.1　公司税 461
18.2　公司税和个人税 464
18.3　财务困境成本 467
18.4　融资选择的啄序 479
本章总结 485
扩展阅读 486
练习题 486
网络中的金融 490
第19章　融资与估值 491
19.1　税后加权平均资本成本 491
19.2　对公司估值 496
19.3　WACC在实践中的应用 501
19.4　调整的净现值 508
19.5　回答问题 512
本章总结 514
扩展阅读 515
练习题 515
网络中的金融 520
附录　贴现安全名义现金流 521
附录　部分基础题的答案 A-1



Brief Contents
Foreword
About the Authors
Preface
Some Commonly Used Symbols
Some Useful Formulas
Glossary
Part One: Value
1 Introduction to Corporate Finance 1
2 How to Calculate Present Values 19
3 Valuing Bonds 46
4 The Value of Common Stocks 76
5 Net Present Value and Other Investment Criteria 105
6 Making Investment Decisions with the Net Present Value Rule 132
Part Two: Risk
7 Introduction to Risk and Return 162
8 Portfolio Theory and the Capital Asset Pricing Model 192
9 Risk and the Cost of Capital 221
Part Three:　Best Practices in Capital Budgeting
10 Project Analysis 249
11 Investment, Strategy, and Economic Rents 279
12 Agency Problems, Compensation, and Performance Measurement 302
Part Four:　Financing Decisions and Market Efficiency
13 Efficient Markets and Behavioral Finance 327
14 An Overview of Corporate Financing 355
15 How Corporations Issue Securities 379
Part Five:　Payout Policy and Capital Structure
16 Payout Policy 410
17 Does Debt Policy Matter 436
18 How Much Should a Corporation Borrow 460
19 Financing and Valuation 491
APPENDIX　 A-1
Part Six: Options
20 Understanding Options 525
21 Valuing Options 547
22 Real Options 573
Part Seven: Debt Financing
23 Credit Risk and the Value of Corporate Debt 597
24 The Many Different Kinds of Debt 618
25 Leasing 652
Part Eight: Risk Management
26 Managing Risk 673
27 Managing International Risks 707
Part Nine:　Financial Planning and Working Capital Management
28 Financial Analysis 732
29 Financial Planning 759
30 Working Capital Management 787
Part Ten:　Mergers, Corporate Control, and Governance
31 Mergers 813
32 Corporate Restructuring 843
33 Governance and Corporate Control Around the World 867
Part Eleven: Conclusion
34 Conclusion: What We Do and Do Not Know about Finance 887
APPENDIX　 B-1




Contents
Brief Contents
Foreword
About the Authors
Preface
Some Commonly Used Symbols
Some Useful Formulas
Glossary
Part One: Value
1 Introduction to Corporate Finance 1
1-1　Corporate Investment and Financing Decisions 2
Investment Decisions/Financing Decisions/What Is a Corporation /The Role of the Financial Manager
1-2　The Financial Goal of the Corporation 7
Shareholders Want Managers to Maximize Market Value/A Fundamental Result/The Investment　 Trade-Off/Should Managers Look After the Interests of Their Shareholders /Agency Problems and Corporate Governance
1-3　Preview of Coming Attractions 13
Summary 14 · Problem Sets 14 · Appendix: Why Maximizing Shareholder Value Makes Sense 17
2 How to Calculate Present Values 19
2-1　Future Values and Present Values 19
Calculating Future Values/Calculating Present Values/Valuing 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—Perpetuities and Annuities 27
How to Value Perpetuities/How to Value Annuities/Valuing Annuities Due/Calculating Annual Payments/Future Value of an Annuity
2-3　More Shortcuts—Growing Perpetuities and Annuities 34
Growing Perpetuities/Growing Annuities
2-4　How Interest Is Paid and Quoted 36
Continuous Compounding
Summary 39 · Problem Sets 40 · Finance on the Web 45
3 Valuing Bonds 46
3–1　Using the Present Value Formula to Value Bonds 47
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 Rates 50
Duration and Volatility
3-3　The Term Structure of Interest Rates 54
Spot Rates, Bond Prices, and the Law of OnePrice/Measuring the Term Structure/Why theDiscount Factor Declines as FuturityIncreases—and a Digression on MoneyMachines
3-4　Explaining the Term Structure 58
Expectations Theory of the Term　Structure/Introducing Risk/Inflation and Term Structure
3-5　Real and Nominal Rates of Interest 60
Indexed Bonds and the Real Rate of Interest/What Determines the Real Rate of Interest /Inflation and Nominal Interest Rates
3-6　The Risk of Default 64
Corporate Bonds and Default Risk/Sovereign Bonds and Default Risk
Summary 70 · Further Reading 71 · Problem Sets 71 Finance on the Web 75
4 The Value of Common Stocks 76
4-1　How Common Stocks Are Traded 76
Trading Results for GE
4-2　How Common Stocks Are Valued 78
Valuation by Comparables/Stock Prices and Dividends
4-3　Estimating the Cost of Equity Capital 85
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 Share 90
Calculating the Present Value of Growth Opportunities for Fledgling Electronics
4-5　Valuing a Business by Discounted Cash Flow 93
Valuing the Concatenator Business/Valuation Format/Estimating Horizon Value/A Further Reality Check/Free Cash Flow, Dividends, and Repurchases
Summary 98 · Problem Sets 99 · Finance on the Web 103 Mini-Case: Reeby Sports 104
5 Net Present Value and Other Investment Criteria 105
5-1　A Review of the Basics 105
Net Present Value’s Competitors/Three Points to Remember about NPV/NPV Depends on Cash Flow, Not on Book Returns
5-2　Payback 109
Discounted Payback
5-3　Internal (or Discounted-Cash-Flow) Rate of Return 111
Calculating the IRR/The IRR Rule/Pitfall 1— Lending or Borrowing /Pitfall 2—Multiple Rates of Return/Pitfall 3—Mutually Exclusive Projects/Pitfall 4—What Happens When There Is More than One Opportunity Cost of Capital /The Verdict on IRR
5-4　Choosing Capital Investments When Resources Are Limited 119
An Easy Problem in Capital Rationing/Uses of Capital Rationing Models
Summary 123 · Further Reading 124 · Problem Sets 125 · Mini-Case: Vegetron’s CFO Calls Again 129
6 Making Investment Decisions with the Net Present Value Rule 132
6-1　Applying the Net Present Value Rule 132
Rule 1: Only Cash Flow Is Relevant/Rule 2: Estimate Cash Flows on an Incremental Basis/Rule3: Treat Inflation Consistently/Rule 4: Separate Investment and Financing Decisions
6-2　Example—IM&C’s Fertilizer Project 139
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　Using the NPV Rule to Choose among Projects 146
Problem 1: The Investment Timing Decision/Problem 2: The Choice between Long- and Short-Lived Equipment/Problem 3: When to Replace an Old Machine/Problem 4: Cost of Excess Capacity
Summary 151 · Problem Sets 152 · Mini-Case: New Economy Transport (A) and (B) 159
Part Two: Risk
7 Introduction to Risk and Return 162
7-1　Over a Century of Capital Market History in One Easy Lesson 162
Arithmetic Averages and Compound Annual Returns/Using Historical Evidence to Evaluate Today’s Cost of Capital/Dividend Yields and the Risk Premium
7-2　Measuring Portfolio Risk 169
Variance and Standard Deviation/MeasuringVariability/How Diversification Reduces Risk
7-3　Calculating Portfolio Risk 176
General Formula for Computing Portfolio Risk/Do I Really Have to Add up 25 Million Boxes
7-4　How Individual Securities Affect Portfolio Risk 180
Market Risk Is Measured by Beta/Why Security Betas Determine Portfolio Risk
7-5　Diversification and Value Additivity 184
Summary 185 · Further Reading 186　Problem Sets 186 · Finance on the Web 191
8 Portfolio Theory and the Capital Asset Pricing Model 192
8-1　Harry Markowitz and the Birth of Portfolio Theory 192
Combining Stocks into Portfolios/We Introduce Borrowing and Lending
8-2　The Relationship Between Risk and Return 199
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 Model 202
Tests of the Capital Asset Pricing Model/Assumptions behind the Capital Asset Pricing Model
8-4　Some Alternative Theories 206
Arbitrage Pricing Theory/A Comparison of the Capital Asset Pricing Model and Arbitrage Pricing Theory/The Three-Factor Model
Summary 211 · Further Reading 212 · Problem Sets212 · Finance on the Web 218 · Mini-Case: John and Marsha on Portfolio Selection 219
9 Risk and the Cost of Capital 221
9-1　Company and Project Costs of Capital 222
Perfect Pitch and the Cost of Capital/Debt and the Company Cost of Capital
9-2　Measuring the Cost of Equity 225
Estimating Beta/The Expected Return on Union Pacific Corporation’s Common Stock/Union Pacific’s After-Tax Weighted-Average Cost of Capital/Union Pacific’s Asset Beta
9-3　Analyzing Project Risk 229
What Determines Asset Betas /Don’t Be Fooled by Diversifiable Risk/Avoid Fudge Factors in Discount Rates/Discount Rates for International Projects
9-4　Certainty Equivalents—Another Way to Adjust for Risk 235
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
Summary 241 · Further Reading 242 · Problem Sets 242 · Finance on the Web 246 · Mini-Case: The Jones Family, Incorporated 247
Part Three:　Best Practices in Capital Budgeting
10 Project Analysis 249
10-1　The Capital Investment Process 250
Project Authorizations—and the Problem of Biased Forecasts/Postaudits
10-2　Sensitivity Analysis 252
Value of Information/Limits to Sensitivity　Analysis/Scenario Analysis/Break-Even　Analysis/Operating Leverage and the Break-Even Point
10-3　Monte Carlo Simulation 259
Simulating the Electric Scooter Project
10-4　Real Options and Decision Trees 262
The Option to Expand/The Option to　Abandon/Production Options/Timing Options/More onDecision Trees/Pro and Con　Decision Trees
Summary 270 · Further Reading 271 Problem Sets 271 · Mini-Case: Waldo County 277
11 Investment, Strategy,　and Economic Rents 279
11-1　Look First to Market Values 279
The Cadillac and the Movie Star
11-2　Economic Rents and Competitive Advantage 284
11-3　Marvin Enterprises Decides to Exploit a New Technology—an Example 288
Forecasting Prices of Gargle Blasters/The Value of Marvin’s New Expansion/Alternative Expansion Plans/The Value of Marvin Stock/The Lessons of Marvin Enterprises
Summary 295 · Further Reading 295· Problem Sets 295 Mini-Case: Ecsy-Cola 300
12 Agency Problems, Compensation, and Performance Measurement 302
12-1　Incentives and Compensation 302
Agency Problems in Capital Budgeting/Agency Problems and Risk Taking/Monitoring/Management Compensation/Incentive Compensation/Monitoring Pay for Performance
12-2　Measuring and Rewarding Performance: Residual Income and EVA 311
Pros and Cons of EVA
12-3　Biases in Accounting Measures of Performance 314
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
Summary 320 · Further Reading 321 · Problem Sets 322
Part Four:　Financing Decisions and Market Efficiency
13 Efficient Markets　and Behavioral Finance 327
13-1　We Always Come Back to NPV 328
Differences between Investment and Financing Decisions
13-2　What Is an Efficient Market 329
A Startling Discovery: Price Changes Are Random/Competition and the Efficient Market Hypothesis/Efficient Markets: The Evidence
13-3　The Evidence Against Market Efficiency 336
Do Investors Respond Slowly to New Information /Bubbles and Market Efficiency
13-4　Behavioral Finance 340
Sentiment/Limits to Arbitrage/Incentive Problems and the Subprime Crisis
13-5　The Five Lessons of Market Efficiency 344
Lesson 1: Markets Have No Memory/Lesson 2: Trust Market Prices/Lesson 3: Read the Entrails/Lesson 4: The Do-It-Yourself Alternative/Lesson5:Seen One Stock, Seen Them All/What If Markets Are Not Efficient Implications for the Financial Manager
Summary 349 · Further Reading 350 Problem Sets 351 · Finance on the Web 354
14 An Overview of　Corporate Financing 355
14-1　Patterns of Corporate Financing 355
Do Firms Rely Too Much on Internal Funds /How Much Do Firms Borrow
14-2　Common Stock 358
Voting Procedures/Dual-Class Shares and Private Benefits/Equity in Disguise/Preferred Stock
14-3　Debt 363
Debt Comes in Many Forms/A Debt by Any Other Name/Variety’s the Very Spice of Life
14-4　Financial Markets and Intermediaries 366
Financial Markets/Financial Intermediaries/Investment Funds/Financial Institutions
14-5　The Role of Financial Markets and Intermediaries 372
The Payment Mechanism/Borrowing and Lending/Pooling Risk/Information Provided by Financial Markets/The Financial Crisis of 2007–2009
Summary 376 · Further Reading 376 Problem Sets 377　· Finance on the Web 378
15 How Corporations Issue Securities 379
15-1　Venture Capital 379
The Venture Capital Market
15-2　The Initial Public Offering 384
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 IPOs 392
Types of Auction: A Digression
15-4　Security Sales by Public Companies 394
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 Issues 399
Summary 400 · Further Reading 400Problem Sets 401 · Finance on the Web 405Appendix: Marvin’s New-Issue Prospectus 406
Part Five:　Payout Policy and Capital Structure
16 Payout Policy 410
16-1　Facts About Payout 411
How Firms Pay Dividends/How Firms Repurchase Stock
16-2　The Information Content of Dividends and Repurchases 413
The Information Content of Share Repurchases
16-3　Dividends or Repurchases The Payout Controversy 416
Payout Policy Is Irrelevant in Perfect Capital Markets/Dividends or Repurchases An Example/Stock Repurchases and DCF Models of Share Price/Dividends and Share Issues
16-4　The Rightists 421
Payout Policy, Investment Policy, and Management Incentives
16-5　Taxes and the Radical Left 422
Empirical Evidence on Dividends and Taxes/Alternative Tax Systems/Taxes and Payout—A Summary
16-6　Payout Policy and the Life Cycle of the Firm 426
Payout and Corporate Governance
Summary 429 · Further Reading 430 · Problem Sets 430
17 Does Debt Policy Matter 436
17-1　The Effect of Financial Leverage in a Competitive Tax-Free Economy 437
Enter Modigliani and Miller/The Law of Conservation of Value/An Example of Proposition 1
17-2　Financial Risk and Expected Returns 442
Proposition 2/How Changing Capital Structure Affects Beta/Watch Out for Hidden Leverage
17-3　The Weighted-Average Cost of Capital 448
Two Warnings/Rates of Return on Levered　Equity—The Traditional Position/Today’sUnsatisfied Clienteles Are Probably Interested in Exotic Securities/Imperfections and Opportunities
17-4　A Final Word on the After-Tax　Weighted-Average Cost of Capital 452
Summary 453 · Further Reading 453 · Problem Sets 454 Mini-Case: Claxton Drywall Comes to the Rescue 458
18 How Much Should a　Corporation Borrow 460
18-1　Corporate Taxes 461
How Do Interest Tax Shields Contribute to the Value of Stockholders’ Equity /Recasting Johnson & Johnson’s Capital Structure/MM and Taxes
18-2　Corporate and Personal Taxes 464
18-3　Costs of Financial Distress 467
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 Choices 479
Debt and Equity Issues with Asymmetric Information/Implications of the Pecking Order/The Trade-Off Theory vs. the Pecking-Order Theory—Some Evidence/The Bright Side and the Dark Side of Financial Slack/Is There a Theory of Optimal Capital Structure
Summary 485 · Further Reading 486 · Problem Sets 486 Finance on the Web 490
19 Financing and Valuation 491
19-1　The After-Tax Weighted-Average Cost of Capital 491
Review of Assumptions/Mistakes People Make in Using the Weighted-Average Formula
19-2　Valuing Businesses 496
Valuing Rio Corporation/Estimating Horizon Value/WACC vs. the Flow-to-Equity Method
19-3　Using WACC In Practice 501
Some Tricks of the Trade/Adjusting WACC when Debt Ratios and Business Risks Differ/Unlevering and Relevering Betas/The Importance of Rebalancing/The Modigliani–Miller Formula, Plus Some Final Advice
19-4　Adjusted Present Value 508
APV for the Perpetual Crusher/Other Financing Side Effects/APV for Businesses/APV for International Investments
19-5　Your Questions Answered 512
Summary 514 · Further Reading 515 Problem Sets 515 · Finance on the Web 520　Appendix: Discounting Safe, Nominal Cash Flows 521
APPENDIX A-1