本书是一本风靡全球的公司理财学教科书。它以独特的视角、完整而有力的概念重新构建了公司理财学的基本框架。全书围绕以NPV分析为主干的价值评估这条主线，紧密结合理财实践的需要，精选了公司理财的基本概念与观念、财务报表与长期财务计划、未来现金流量估价、资本预算、风险与报酬、资本成本与长期财务政策、短期财务计划与管理、国际公司理财等方面的核心内容。作者以平实的语言，配以丰富的案例、举例，系统、扼要、有效地传达了公司理财的基本观念、基本方法和实务技能。

罗斯教授生前绝笔，一部金融理论与实践完美结合的殿堂级巨著！
全球累计发行数1000000册的财经领域经典教科书！
哈佛大学、芝加哥大学、耶鲁大学、宾夕法尼亚大学、加州大学洛杉矶分校、多伦多大学、
英属哥伦比亚大学、渥太华大学、北京大学、清华大学、复旦大学等众多中外名校推荐采用！

内容特色
拓展现代金融的核心概念：全书深度发展了套利、净现值、有效市场、代理理论、期权以及风险与收益间的权衡等重点的金融概念，从理论及其运用的角度解释了公司财务与金融。
整体性强：全书主旨在于将公司理财的知识作为一种全面而又统一的整体，而不是一系列无关主题的集合。
突出金融理论的现实意义：全书重点强调现代金融的基本原理，同时结合现实中的案例来充分说明这些理论对于公司财务管理的指导作用。

“公司理财”的教学和实践从未像今天这样富有挑战性和令人振奋。在过去的10年，我们目睹了金融市场的深刻变革和金融工具的巨大创新。在21世纪的最初几年，我们仍然经常看到金融报刊报道诸如接管、垃圾债券、财务重组、首次公开发行、破产和衍生金融工具等信息。此外，我们也对期权、私募股权资本与风险资本、次级抵押债券、救市和信用利差等产生了新的认识。正如我们从最近的全球信用危机和股票市场崩盘中发现的，全球的金融市场比以往任何时候更加一体化。公司理财的理论和实践在快速变化，因此教学必须与之保持同步发展。
这些变化和发展对“公司理财”这一课程的教学提出了新的任务。一方面，随着时间推移而不断变化的财务和金融实践使得“公司理财”的教学内容难以紧跟时代的步伐。另一方面，教师必须在纷繁变化的潮流中去伪存真，精选有意义的永久题材。我们解决这个问题的办法是强调现代财务理论的基本原理，并将这些原理与实例结合起来阐述，同时，越来越多地选用来自国外的实例。
由于书本知识的局限，许多初学者认为“公司理财”是一门综合各种不同的论题于一体的大杂烩。我们希望本书在最主要的财务原理的引导下成为统一的整体，即好的财务决策将增加公司和股东的价值，糟糕的财务决策则损坏价值。价值增加或者损坏的关键在于现金流。要增加价值，公司产生的现金流必须大于其耗用的现金流。我们希望本书的所有章节都能凸显这个简单的财务学原理。
本书的读者对象
本书可作为工商管理硕士（MBA）学习“公司理财”初级课程的教科书，也可以作为管理学院本科生学习“公司理财”中级课程的教科书。当然，某些教授也会发现这本书可以作为理财专业本科生的初级教材。
我们假设学习这门课程的学生已经或正在学习“会计学”“统计学”和“经济学”。这些先修课程有助于学生理解“公司理财”中一些深奥的难题。但是，无论如何，这本书自成体系，先修课的内容并非至关重要。本书所涉及的数学也仅限于基本代数知识。
第11版的变化
《公司理财》第11版具有如下新变化。
每章都进行了更新并补充了与之相关的国际化内容。我们试图通过例子和章前语来捕捉公司理财的趣味点。此外，全书还介绍了如何利用Excel处理财务问题。
第2章：整章重写以强调现金流的概念以及它与会计利润的差异。
第6章：整章重构以强调诸如成本节约型投资和不同生命周期的投资等特殊投资决策案例。
第9章：更新了许多股票交易的方法。
第10章：更新了关于历史风险与收益的材料，更好地解释了权益风险溢价的动机。
第13章：更详细地讨论了如何用CAPM模型计算权益资本成本和WACC。
第14章：更新并增加了行为金融学的内容，并探讨其对有效市场假说的挑战。
第15章：扩展了对权益和负债的描述，对可赎回条款的价值以及市场价值与账面价值的差异增加了新的材料。
第19～20章：继续构建财务生命周期理论，即公司资本结构决策是在其生命周期的内外部需求变化的驱动下做出的。
致谢语
《公司理财》第11版的问世得到了很多人的帮助。我们要特别感谢贝尔蒙特大学的Joe Smolira教授和Kay Johnson教授，他们开发了本书的配套辅助学习材料。我们也要感谢纽约大学的Edward I. Altman教授，杜兰大学的Robert S. Hansen教授， 南加州大学的Duke Bristow、Harry DeAngelo和Suh-Pyng Ku教授以及佛罗里达大学的Jay R. Ritter教授，感谢他们的帮助和多次为本书提出宝贵的意见。
我们要感谢肯塔基大学的学生Steve Hailey和Andrew Beeli，感谢他们大量的验算与在纠错方面的努力。
在过去的3年中，许多读者发现了书中的某些错误。我们的目标是提供一本公司理财方面最好的教科书，因此这些信息对我们的修订工作具有无可估量的价值。
麦格劳–希尔出版社中许多才华横溢的专家对《公司理财》第11版的出版做出了重要的贡献。我们要特别感谢Chuck Synovec、Jennifer Upton、Melissa Caughlin、Kathryn Wright、Matt Diamond、Michele Janicek和Bruce Gin等。
最后，我们要感谢我们的家人和朋友：Carol、Kate、Jon、Jan、Mark和Lynne，感谢他们的宽容和帮助。

财务管理

罗斯教授生前绝笔，一部金融理论与实践完美结合的殿堂级巨著！

全球累计发行数10000000册的财经领域经典教科书！
哈佛大学、芝加哥大学、耶鲁大学、宾夕法尼亚大学、加州大学洛杉矶分校、多伦多大学、英属哥伦比亚大学、渥太华大学、北京大学、清华大学、复旦大学等众多中外名校推荐采用！
内容特色：
拓展现代金融的核心概念：全书深度发展了套利、净现值、有效市场、代理理论、期权以及风险与收益间的权衡等重点的金融概念，从理论及其运用的角度解释了公司财务与金融。
整体性强：全书主旨在于将公司理财的知识作为一种全面而又统一的整体，而不是一系列无关主题的集合。
突出金融理论的现实意义：全书重点强调现代金融的基本原理，同时结合现实中的案例来充分说明这些理论对于公司财务管理的指导作用。
链接《公司理财》（原书第11版）封面
作者：斯蒂芬·罗斯等
书号：978-7-111-57415-6
定价：119元
链接《中级财务管理》（原书第11版）封面
作者：尤金F.布里格姆
书号：978-7-111-56529-1
定价：129元

目录
作者简介
前言
第一篇　概论
第1章　公司理财导论　1
1.1　什么是公司理财　1
1.2　公司制企业　4
1.3　现金流的重要性　8
1.4　财务管理的目标　11
1.5　代理问题和公司的控制　13
1.6　管制　16
本章小结　18
思考与练习　18
第2章　会计报表与现金流量　20
2.1　资产负债表　20
2.2　利润表　23
2.3　税　26
2.4　净营运资本　28
2.5　企业的现金流量　29
2.6　会计现金流量表　32
2.7　现金流量管理　34
本章小结　35
思考与练习　36
小案例　37
第3章　财务报表分析与长期计划　40
3.1　财务报表分析　40
3.2　比率分析　44
3.3　杜邦恒等式　54
3.4　财务模型　57
3.5　外部融资与增长　63
3.6　关于财务计划模型的注意事项　71
本章小结　72
思考与练习　72
小案例　74
第二篇　估值与资本预算
第4章　折现现金流量估价　77
4.1　价值评估：单期投资的情形　77
4.2　多期投资的情形　81
4.3　复利计息期数　92
4.4　简化公式　96
4.5　分期偿还贷款　106
4.6　如何评估公司的价值　110
本章小结　112
思考与练习　113
第5章　净现值和投资评价的其他方法　115
5.1　为什么要使用净现值　115
5.2　回收期法　118
5.3　折现回收期法　121
5.4　内部收益率法　121
5.5　内部收益率法存在的问题　125
5.6　盈利指数法　135
5.7　资本预算实务　137
本章小结　139
思考与练习　140
第6章　投资决策　143
6.1　增量现金流量：资本预算的关键　143
6.2　Baldwin公司的案例　146
6.3　经营性现金流量的不同算法　153
6.4　折现现金流分析的一些典型特例　156
6.5　通货膨胀与资本预算　162
本章小结　167
思考与练习　167
第7章　风险分析、实物期权和资本预算　170
7.1　敏感性分析、场景分析和盈亏平衡分析　170
7.2　蒙特卡罗模拟　178
7.3　实物期权　182
7.4　决策树　187
本章小结　189
思考与练习　190
第8章　利率和债券估值　192
8.1　债券和债券估值　192
8.2　政府债券和公司债券　202
8.3　债券市场　206
8.4　通货膨胀与利率　211
8.5　债券收益率的决定因子　215
本章小结　219
思考与练习　219
第9章　股票估值　221
9.1　普通股的现值　221
9.2　股利折现模型中的参数估计　226
9.3　市场类比法　231
9.4　使用自由现金流对股票估值　235
9.5　股票市场　236
本章小结　242
思考与练习　243
第三篇　风险
第10章　收益和风险：从市场历史得到的经验　244
10.1　收益　244
10.2　持有期收益　248
10.3　收益的统计量　254
10.4　股票的平均收益和无风险收益　256
10.5　风险的统计量　256
10.6　更多关于平均收益的内容　260
10.7　美国股权风险溢价：历史和国际的视角　262
10.8　2008： 金融危机的一年　265
本章小结　267
思考与练习　267
小案例　270
第11章　收益和风险：资本资产定价模型　273
11.1　单个证券　273
11.2　期望收益、方差和协方差　274
11.3　投资组合的收益和风险　279
11.4　两种资产组合的有效集　283
11.5　多种资产组合的有效集　288
11.6　多元化　291
11.7　无风险借贷　294
11.8　市场均衡　297
11.9　风险与期望收益之间的关系（资本资产定价模型）　301
本章小结　305
思考与练习　306
小案例　313
第12章　看待风险与收益的另一种观点：套利定价理论　314
12.1　简介　314
12.2　系统风险和贝塔系数　314
12.3　投资组合与因素模型　317
12.4　贝塔系数、套利与期望收益　322
12.5　资本资产定价模型和套利定价模型　324
12.6　资产定价的实证方法　326
本章小结　329
思考与练习　329
小案例　334
第13章　风险、资本成本和估值　336
13.1　权益资本成本　336
13.2　用资本资产定价模型估计权益资本成本　337
13.3　估计贝塔　341
13.4　贝塔的影响因素　345
13.5　股利折现模型法　347
13.6　部门和项目的资本成本　349
13.7　固定收益证券的成本　351
13.8　加权平均资本成本　353
13.9　运用RWACC进行估值　354
13.10　伊士曼公司的资本成本估计　358
13.11　融资成本和加权平均资本成本　360
本章小结　363
思考与练习　364
第四篇　资本结构与股利政策
第14章　有效资本市场和行为挑战　365
14.1　融资决策能创造价值吗　365
14.2　有效资本市场的描述　367
14.3　有效市场的类型　370
14.4　证据　374
14.5　行为理论对市场有效性的挑战　379
14.6　经验证据对市场有效性的挑战　383
14.7　关于二者差异的评论　388
14.8　对公司理财的意义　390
本章小结　396
思考与练习　397
小案例　403
第15章　长期融资：简介　405
15.1　普通股　405
15.2　公司长期负债　409
15.3　不同类型的债券　415
15.4　银行贷款　416
15.5　国际债券　417
15.6　融资方式　417
15.7　资本结构的最新趋势　419
本章小结　420
思考与练习　421
第16章　资本结构：基本概念　422
16.1　资本结构问题和馅饼理论　422
16.2　企业价值的最大化与股东财富价值的最大化　423
16.3　财务杠杆和企业价值：一个例子　425
16.4　莫迪利亚尼和米勒：命题Ⅱ（无税）　429
16.5　税　438
本章小结　447
思考与练习　448
第17章　资本结构：债务运用的限制　450
17.1　财务困境成本　450
17.2　财务困境成本的种类　452
17.3　能够降低债务成本吗　458
17.4　税收和财务困境成本的综合影响　460
17.5　信号　462
17.6　偷懒、在职消费与有害投资：一个关于权益代理成本的注释　464
17.7　优序融资理论　467
17.8　个人所得税　470
17.9　公司如何确定资本结构　472
本章小结　477
思考与练习　478
第18章　杠杆企业的估值与资本预算　479
18.1　调整净现值法　479
18.2　权益现金流量法　481
18.3　加权平均资本成本法　482
18.4　APV法、FTE法和WACC法的比较　483
18.5　折现率需要估算的估值方法　486
18.6　APV法举例　488
18.7　贝塔系数与财务杠杆　491
本章小结　495
思考与练习　495
第19章　股利政策和其他支付政策　497
19.1　股利的不同种类　497
19.2　发放现金股利的标准程序　498
19.3　基准案例：股利无关论的解释　500
19.4　股票回购　504
19.5　个人所得税、股利与股票回购　507
19.6　偏好高股利政策的现实因素　511
19.7　客户效应：现实问题的解决？　516
19.8　我们所了解的和不了解的股利政策　518
19.9　融会贯通　523
19.10　股票股利与股票拆细　525
本章小结　529
思考与练习　529
小案例　535
第五篇　长期融资
第20章　资本筹集　537
20.1　早期融资与风险资本　537
20.2　公开发行　541
20.3　另一种发行方式　542
20.4　现金发行　544
20.5　新股发行公告和公司价值　551
20.6　新股发行成本　552
20.7　配股　555
20.8　配股之谜　560
20.9　稀释　561
20.10　暂搁注册　563
20.11　长期债券发行　564
本章小结　565
思考与练习　565
第21章　租赁　568
21.1　租赁类型　568
21.2　租赁会计　570
21.3　税收、美国国税局和租赁　572
21.4　租赁的现金流量　573
21.5　公司所得税下的折现和债务融资能力　575
21.6　“租赁—购买”决策的NPV分析法　577
21.7　债务置换和租赁价值评估　578
21.8　租赁值得吗——基本情形　581
21.9　租赁的理由　582
21.10　关于租赁的其他未被解决的问题　586
本章小结　587
思考与练习　588
第六篇　期权、期货与公司理财
第22章　期权与公司理财　591
22.1　期权　591
22.2　看涨期权　592
22.3　看跌期权　593
22.4　售出期权　595
22.5　期权报价　596
22.6　期权组合　597
22.7　期权定价　600
22.8　期权定价公式　605
22.9　视为期权的股票和债券　613
22.10　期权和公司选择：一些实证应用　618
22.11　项目投资和期权　622
本章小结　625
思考与练习　625
小案例　634
第23章　期权与公司理财：推广与应用　636
23.1　经理股票期权　636
23.2　评估创始企业　640
23.3　续述二叉树模型　643
23.4　停业决策和重新开业决策　649
本章小结　656
思考与练习　656
小案例　659
第24章　认股权证和可转换债券　660
24.1　认股权证　660
24.2　认股权证与看涨期权的差异　661
24.3　认股权证定价与布莱克–斯科尔斯模型　664
24.4　可转换债券　666
24.5　可转换债券的价值评估　666
24.6　发行可转换债券的原因透视　669
24.7　为什么发行认股权证和可转换债券　672
24.8　转换策略　674
本章小结　675
思考与练习　676
第25章　衍生品和套期保值风险　677
25.1　衍生品、套期保值和风险　677
25.2　远期合约　678
25.3　期货合约　679
25.4　套期保值　683
25.5　利率期货合约　685
25.6　久期套期保值　692
25.7　互换合约　698
25.8　衍生品的实际运用情况　702
本章小结　704
思考与练习　704
小案例　708
第七篇　短期财务
第26章　短期财务与计划　709
26.1　跟踪现金与净营运资本　710
26.2　经营周期与现金周期　711
26.3　短期财务政策的若干方面　718
26.4　现金预算　724
26.5　短期融资计划　726
本章小结　727
思考与练习　728
小案例　730
第27章　现金管理　731
27.1　持有现金的目的　731
27.2　理解浮差　733
27.3　现金回收及集中　739
27.4　现金支付管理　744
27.5　闲置资金的投资　746
本章小结　748
思考与练习　749
小案例　751
第28章　信用和存货管理　753
28.1　信用和应收账款 　753
28.2　销售条件　755
28.3　分析信用政策　759
28.4　最优信用政策　761
28.5　信用分析　763
28.6　收账政策　766
28.7　存货管理　767
28.8　存货管理技术　769
本章小结　776
思考与练习　777
第八篇　理财专题
第29章　收购与兼并　778
29.1　收购的基本形式　778
29.2　协同效应　781
29.3　并购协同效应的来源　782
29.4　兼并的两个“坏”理由　788
29.5　股东因风险降低而付出的代价　790
29.6　兼并的净现值　792
29.7　善意接管与恶意接管　796
29.8　防御性策略　798
29.9　兼并是否创造了价值　801
29.10　收购的税负形式　806
29.11　兼并的会计处理方法　808
29.12　转为非上市交易和杠杆收购　809
29.13　剥离　810
本章小结　812
思考与练习　812
第30章　财务困境　815
30.1　什么是财务困境　815
30.2　财务困境时会发生什么　817
30.3　破产清算与重组　819
30.4　私下和解与破产：哪个最好　824
30.5　破产前重组　825
30.6　企业破产预测：Z值模型　827
本章小结　829
思考与练习　829
第31章　跨国公司财务　831
31.1　专业术语　832
31.2　外汇市场与汇率　832
31.3　购买力平价说　838
31.4　利率平价理论、无偏远期利率和国际费雪效应　841
31.5　跨国公司预算　845
31.6　汇率风险　848
31.7　政治风险　851
本章小结　852
思考与练习　853
小案例　855
附录A　数学用表　856
附录B　部分思考与练习参考答案　865
术语表　868


Contents
About the Authors
Preface
PART I Overview
Chapter 1
Introduction to Corporate Finance 1
1.1 What Is Corporate Finance 1
The Balance Sheet Model of the Firm 1
The Financial Manager 3
1.2 The Corporate Firm 4
The Sole Proprietorship 4
The Partnership 4
The Corporation 5
A Corporation by Another Name . . . 7
1.3 The Importance of Cash Flows 8
1.4 The Goal of Financial Management 11
Possible Goals 11
The Goal of Financial Management 12
A More General Goal 12
1.5 The Agency Problem and Control
of the Corporation 13
Agency Relationships 13
Management Goals 14
Do Managers Act in the Stockholders’ Interests 14
Stakeholders 16
1.6 Regulation 16
The Securities Act of 1933 and the Securities Exchange.Act.of 1934 16
Sarbanes-Oxley 17
Summary and Conclusions 18
Questions and Problems 18
Chapter 2
Financial Statements and Cash Flow 20
2.1 The Balance Sheet 20
Liquidity 21
Debt versus Equity 22
Value versus Cost 22
2.2 The Income Statement 23
Generally Accepted Accounting Principles 24
Noncash Items 25
Time and Costs 25
2.3 Taxes 26
Corporate Tax Rates 26
Average versus Marginal Tax Rates 26
2.4 Net Working Capital 28
2.5 Cash Flow of the Firm 29
2.6 The Accounting Statement of Cash Flows 32
Cash Flow from Financing Activities 33
2.7 Cash Flow Management 34
Summary and Conclusions 35
Questions and Problems 36
Mini Case: Cash Flows at Warf Computers, Inc. 37
Chapter 3
Financial Statements Analysis
and Financial Models 40
3.1 Financial Statements Analysis 40
Standardizing Statements 40
Common-Size Balance Sheets 41
Common-Size Income Statements 42
3.2 Ratio Analysis 44
Short-Term Solvency or Liquidity Measures 45
Long-Term Solvency Measures 46
Asset Management or Turnover Measures 48
Profitability Measures 50
Market Value Measures 51
3.3 The DuPont Identity 54
A Closer Look at ROE 54
Problems with Financial Statement Analysis 56
3.4 Financial Models 57
A Simple Financial Planning Model 57
The Percentage of Sales Approach 59
3.5 External Financing and Growth 63
EFN and Growth 64
Financial Policy and Growth 66
A Note about Sustainable
Growth Rate Calculations 70
3.6 Some Caveats Regarding Financial Planning.Models 71
Summary and Conclusions 72
Questions and Problems 72
Mini Case: Ratios and Financial Planning at
East Coast Yachts 74
PART II Valuation and
Capital Budgeting
Chapter 4
Discounted Cash Flow Valuation 77
4.1 Valuation: The One-Period Case 77
4.2 The Multiperiod Case 81
Future Value and Compounding 81
The Power of Compounding: A Digression 84
Present Value and Discounting 85
Finding the Number of Periods 88
The Algebraic Formula 91
4.3 Compounding Periods 92
Distinction between Annual Percentage Rate and Effective Annual Rate 93
Compounding over Many Years 94
Continuous Compounding 94
4.4 Simplifications 96
Perpetuity 96
Growing Perpetuity 98
Annuity 99
Growing Annuity 105
4.5 Loan Amortization 106
4.6 What Is a Firm Worth 110
Summary and Conclusions 112
Questions and Problems 113
Chapter 5
Net Present Value and Other
Investment Rules 115
5.1 Why Use Net Present Value 115
5.2 The Payback Period Method 118
Defining the Rule 118
Problems with the Payback Method 119
Managerial Perspective 120
Summary of Payback 121
5.3 The Discounted Payback Period Method 121
5.4 The Internal Rate of Return 121
5.5 Problems with the IRR Approach 125
Definition of Independent and Mutually
Exclusive Projects 125
Two General Problems Affecting Both
Independent and.Mutually Exclusive Projects 125
Problems Specific to Mutually Exclusive Projects 129
Redeeming Qualities of IRR 134
A Test 134
5.6 The Profitability Index 135
Calculation of Profitability Index 135
5.7 The Practice of Capital Budgeting 137
Summary and Conclusions 139
Questions and Problems 140
Chapter 6
Making Capital Investment Decisions 143
6.1 Incremental Cash Flows: The Key
to Capital Budgeting 143
Cash Flows—Not Accounting Income 143
Sunk Costs 144
Opportunity Costs 145
Side Effects 145
Allocated Costs 146
6.2 The Baldwin Company: An Example 146
An Analysis of the Project 149
Which Set of Books 151
A Note about Net Working Capital 151
A Note about Depreciation 152
Interest Expense 153
6.3 Alternative Definitions
of Operating Cash Flow 153
The Top-Down Approach 154
The Bottom-Up Approach 154
The Tax Shield Approach 155
Conclusion 156
6.4 Some Special Cases of Discounted
Cash Flow Analysis 156
Evaluating Cost-Cutting Proposals 156
Setting The Bid Price 158
Investments of Unequal Lives: The Equivalent
Annual Cost Method 160
6.5 Inflation and Capital Budgeting 162
Interest Rates and Inflation 162
Cash Flow and Inflation 164
Discounting: Nominal or Real 164
Summary and Conclusions 167
Questions and Problems 167
Chapter 7
Risk Analysis, Real Options,
and Capital Budgeting 170
7.1 Sensitivity Analysis, Scenario Analysis,
and Break-Even Analysis 170
Sensitivity Analysis and Scenario Analysis 170
Break-Even Analysis 174
7.2 Monte Carlo Simulation 178
Step 1: Specify the Basic Model 178
Step 2: Specify a Distribution
for Each Variable in the Model 178
Step 3: The Computer Draws
One Outcome 181
Step 4: Repeat the Procedure 181
Step 5: Calculate NPV 182
7.3 Real Options 182
The Option to Expand 183
The Option to Abandon 184
Timing Options 186
7.4 Decision Trees 187
Summary and Conclusions 189
Questions and Problems 190
Chapter 8
Interest Rates and Bond Valuation 192
8.1 Bonds and Bond Valuation 192
Bond Features and Prices 192
Bond Values and Yields 193
Interest Rate Risk 196
Finding the Yield to Maturity:
More Trial and Error 198
Zero Coupon Bonds 200
8.2 Government and
Corporate Bonds 202
Government Bonds 202
Corporate Bonds 203
Bond Ratings 205
8.3 Bond Markets 206
How Bonds Are Bought and Sold 206
Bond Price Reporting 207
A Note on Bond Price Quotes 210
8.4 Inflation and Interest Rates 211
Real versus Nominal Rates 211
Inflation Risk and Inflation-Linked Bonds 212
The Fisher Effect 213
8.5 Determinants of Bond Yields 215
The Term Structure of Interest Rates 215
Bond Yields and the Yield Curve:
Putting It All Together 217
Conclusion 219
Summary and Conclusions 219
Questions and Problems 219
Chapter 9
Stock Valuation 221
9.1 The Present Value of Common Stocks 221
Dividends versus Capital Gains 221
Valuation of Different Types of Stocks 222
9.2 Estimates of Parameters in the
Dividend Discount Model 226
Where Does g Come From 226
Where Does R Come From 228
A Healthy Sense of Skepticism 229
Dividends or Earnings: Which to Discount 230
The No-Dividend Firm 230
9.3 Comparables 231
Price-to-Earnings Ratio 231
Enterprise Value Ratios 234
9.4 Valuing Stocks Using Free Cash Flows 235
9.5 The Stock Markets 236
Dealers and Brokers 237
Organization of the NYSE 237
Types of Orders 240
NASDAQ Operations 240
Stock Market Reporting 241
Summary and Conclusions 242
Questions and Problems 243
PART III Risk
Chapter 10
Risk and Return: Lessons
from Market History 244
10.1 Returns 244
Dollar Returns 244
Percentage Returns 246
10.2 Holding Period Returns 248
10.3 Return Statistics 254
10.4 Average Stock Returns
and Risk-Free Returns 256
10.5 Risk Statistics 256
Variance 256
Normal Distribution and Its Implications
for Standard Deviation 259
10.6 More on Average Returns 260
Arithmetic versus Geometric Averages 260
Calculating Geometric Average Returns 260
Arithmetic Average Return or Geometric
Average Return 262
10.7 The U.S. Equity Risk Premium: Historical and International Perspectives 262
10.8 2008: A Year of Financial Crisis 265
Summary and Conclusions 267
Questions and Problems 267
Mini Case: A Job at East Coast. Yachts 270
Chapter 11
Return and Risk: The Capital Asset Pricing Model (CAPM) 273
11.1 Individual Securities 273
11.2 Expected Return, Variance,
and Covariance 274
Expected Return and Variance 274
Covariance and Correlation 276
11.3 The Return and Risk for Portfolios 279
The Expected Return on a Portfolio 279
Variance and Standard Deviation of a Portfolio 280
11.4 The Efficient Set for Two Assets 283
11.5 The Efficient Set for Many Securities 288
Variance and Standard Deviation in a
Portfolio of Many Assets 289
11.6 Diversification 291
The Anticipated and Unanticipated
Components of News 291
Risk: Systematic and Unsystematic 291
The Essence of Diversification 292
11.7 Riskless Borrowing and Lending 294
The Optimal Portfolio 296
11.8 Market Equilibrium 297
Definition of the Market Equilibrium Portfolio 297
Definition of Risk When Investors
Hold the Market Portfolio 298
The Formula for Beta 300
A Test 301
11.9 Relationship between Risk and Expected
Return (CAPM) 301
Expected Return on Market 301
Expected Return on Individual Security 302
Summary and Conclusions 305
Questions and Problems 306
Mini Case: A Job At East Coast
Yachts, Part 2 313
Chapter 12
An Alternative View of Risk and Return: The Arbitrage Pricing Theory 314
12.1 Introduction 314
12.2 Systematic Risk and Betas 314
12.3 Portfolios and Factor Models 317
Portfolios and Diversification 319
12.4 Betas, Arbitrage, and Expected Returns 322
The Linear Relationship 322
The Market Portfolio and the Single Factor 323
12.5 The Capital Asset Pricing Model
and the Arbitrage Pricing Theory 324
Differences in Pedagogy 324
Differences in Application 324
12.6 Empirical Approaches to Asset Pricing 326
Empirical Models 326
Style Portfolios 327
Summary and Conclusions 329
Questions and Problems 329
Mini Case: The Fama–French Multifactor
Model and Mutual Fund Returns 334
Chapter 13
Risk, Cost of Capital,
and Valuation 336
13.1 The Cost of Capital 336
13.2 Estimating the Cost of Equity
Capital with the CAPM 337
The Risk-Free Rate 340
Market Risk Premium 340
13.3 Estimation of Beta 341
Real-World Betas 342
Stability of Beta 342
Using an Industry Beta 343
13.4 Determinants of Beta 345
Cyclicality of Revenues 345
Operating Leverage 346
Financial Leverage and Beta 346
13.5 The Dividend Discount
Model Approach 347
Comparison of DDM and CAPM 348
13.6 Cost of Capital for Divisions
and Projects 349
13.7 Cost of Fixed Income Securities 351
Cost of Debt 351
Cost of Preferred Stock 352
13.8 The Weighted Average
Cost of Capital 353
13.9 Valuation with R.WACC 354
Project Evaluation and the RWACC 354
Firm Valuation with the RWACC 355
13.10 Estimating Eastman Chemical’s
Cost of Capital 358
13.11 Flotation Costs and the Weighted
Average Cost of Capital 360
The Basic Approach 360
Flotation Costs and NPV 361
Internal Equity and Flotation Costs 362
Summary and Conclusions 363
Questions and Problems 364
PART IV Capital Structure
and Dividend Policy
Chapter 14
Efficient Capital Markets
and Behavioral Challenges 365
14.1 Can Financing Decisions Create Value 365
14.2 A Description of Efficient Capital Markets 367
Foundations of Market Efficiency 369
14.3 The Different Types of Efficiency 370
The Weak Form 370
The Semistrong and Strong Forms 371
Some Common Misconceptions about the
Efficient Market Hypothesis 373
14.4 The Evidence 374
The Weak Form 374
The Semistrong Form 376
The Strong Form 378
14.5 The Behavioral Challenge
to Market Efficiency 379
Rationality 379
Independent Deviations from Rationality 381
Arbitrage 382
14.6 Empirical Challenges to Market Efficiency 383
14.7 Reviewing the Differences 388
14.8 Implications for Corporate Finance 390
1. Accounting Choices, Financial Choices,
and Market Efficiency 390
2. The Timing Decision 391
3. Speculation and Efficient Markets 392
4. Information in Market Prices 394
Summary and Conclusions 396
Questions and Problems 397
Mini Case: Your 401(k) Account at
East Coast Yachts 403
Chapter 15
Long-Term Financing: An Introduction 405
15.1 Some Features of Common
and Preferred Stocks 405
Common Stock Features 405
Preferred Stock Features 408
15.2 Corporate Long-Term Debt 409
Is It Debt or Equity 410
Long-Term Debt: The Basics 410
The Indenture 412
15.3 Some Different Types of Bonds 415
Floating-Rate Bonds 415
Other Types of Bonds 415
15.4 Bank Loans 416
15.5 International Bonds 417
15.6 Patterns of Financing 417
15.7 Recent Trends in Capital Structure 419
Which Are Best: Book or Market Values 420
Questions and Problems 421
Chapter 16
Capital Structure: Basic Concepts 422
16.1 The Capital Structure Question
and the Pie Theory 422
16.2 Maximizing Firm Value versus
Maximizing Stockholder Interests 423
16.3 Financial Leverage and Firm Value:
An Example 425
Leverage and Returns to Shareholders 425
The Choice between Debt and Equity 427
A Key Assumption 429
16.4 Modigliani and Miller: Proposition II
(No Taxes) 429
Risk to Equityholders Rises with Leverage 429
Proposition II: Required Return to
Equityholders Rises with Leverage 430
MM: An Interpretation 436
16.5 Taxes 438
The Basic Insight 438
Present Value of the Tax Shield 440
Value of the Levered Firm 440
Expected Return and Leverage
under Corporate Taxes 443
The Weighted Average Cost
of Capital, RWACC, and Corporate Taxes 444
Stock Price and Leverage under
Corporate Taxes 445
Summary and Conclusions 447
Questions and Problems 448
Chapter 17
Capital Structure: Limits to
the Use of Debt 450
17.1 Costs of Financial Distress 450
Bankruptcy Risk or Bankruptcy Cost 450
17.2 Description of Financial Distress Costs 452
Direct Costs of Financial Distress: Legal
and Administrative Costs of Liquidation
or Reorganization 452
Indirect Costs of Financial Distress 454
Agency Costs 455
17.3 Can Costs of Debt Be Reduced 458
Protective Covenants 458
Consolidation of Debt 459
17.4 Integration of Tax Effects
and Financial Distress Costs 460
Pie Again 461
17.5 Signaling 462
17.6 Shirking, Perquisites, and Bad
Investments: A Note on
Agency Cost of Equity 464
Effect of Agency Costs of Equity
on Debt–Equity Financing 466
Free Cash Flow 466
17.7 The Pecking-Order Theory 467
Rules of the Pecking Order 468
Implications 469
17.8 Personal Taxes 470
The Basics of Personal Taxes 470
The Effect of Personal Taxes on Capital Structure 470
17.9 How Firms Establish Capital Structure 472
Summary and Conclusions 477
Questions and Problems 478

Chapter 18
Valuation and Capital Budgeting
for the Levered Firm 479
18.1 Adjusted Present Value Approach 479
18.2 Flow to Equity Approach 481
Step 1: Calculating Levered
Cash Flow (LCF) 481
Step 2: Calculating RS 482
Step 3: Valuation 482
18.3 Weighted Average Cost
of Capital Method 482
18.4 A Comparison of the APV, FTE,
and WACC Approaches 483
A Suggested Guideline 484
18.5 Valuation When the Discount Rate
Must Be Estimated 486
18.6 APV Example 488
18.7 Beta and Leverage 491
The Project Is Not Scale Enhancing 493
Summary and Conclusions 495
Questions and Problems 495

Chapter 19
Dividends and Other Payouts 497
19.1 Different Types of Payouts 497
19.2 Standard Method of Cash
Dividend Payment 498
19.3 The Benchmark Case: An Illustration
of the Irrelevance of Dividend Policy 500
Current Policy: Dividends Set Equal
to Cash Flow 500
Alternative Policy: Initial Dividend Is Greater
Than Cash Flow 501
The Indifference Proposition 501
Homemade Dividends 502
A Test 503
Dividends and Investment Policy 503
19.4 Repurchase of Stock 504
Dividend versus Repurchase:
Conceptual Example 505
Dividends versus Repurchases:
Real-World Considerations 506
19.5 Personal Taxes, Dividends,
and Stock Repurchases 507
Firms without Sufficient Cash to Pay
a Dividend 507
Firms with Sufficient Cash to Pay a Dividend 508
Summary of Personal Taxes 511
19.6 Real-World Factors Favoring
a High-Dividend Policy 511
Desire for Current Income 511
Behavioral Finance 512
Agency Costs 513
Information Content of Dividends
and Dividend Signaling 514
19.7 The Clientele Effect: A Resolution
of Real-World Factors 516
19.8 What We Know and Do Not Know
about Dividend Policy 518
Corporate Dividends are Substantial 518
Fewer Companies Pay Dividends 519
Corporations Smooth Dividends 520
Some Survey Evidence about Dividends 521
19.9 Putting It All Together 523
19.10 Stock Dividends and Stock Splits 525
Some Details about Stock Splits
and Stock Dividends 525
Value of Stock Splits and Stock Dividends 527
Reverse Splits 528
Summary and Conclusions 529
Questions and Problems 529
Mini Case: Electronic Timing, Inc. 535
PART V Long-Term Financing
Chapter 20
Raising Capital 537
20.1 Early-Stage Financing
and Venture Capital 537
Venture Capital 538
Stages of Financing 539
Some Venture Capital Realities 540
Venture Capital Investments
and Economic Conditions 541
20.2 The Public Issue 541
20.3 Alternative Issue Methods 542
20.4 The Cash Offer 544
Investment Banks 547
The Offering Price 548
Underpricing: A Possible Explanation 549
20.5 The Announcement of New Equity
and the Value of the Firm 551
20.6 The Cost of New Issues 552
The Costs of Going Public: A Case Study 554
20.7 Rights 555
The Mechanics of a Rights Offering 555
Subscription Price 555
Number of Rights Needed to Purchase
a Share 557
Effect of Rights Offering on Price of Stock 557
Effects on Shareholders 559
The Underwriting Arrangements 559
20.8 The Rights Puzzle 560
20.9 Dilution 561
Dilution of Proportionate Ownership 561
Stock Price Dilution 561
Book Value 562
Earnings Per Share 563
Conclusion 563
20.10 Shelf Registration 563
20.11 Issuing Long-Term Debt 564
Summary and Conclusions 565
Questions and Problems 565
Chapter 21
Leasing 568
21.1 Types of Leases 568
The Basics 568
Operating Leases 569
Financial Leases 569
21.2 Accounting and Leasing 570
21.3 Taxes, the IRS, and Leases 572
21.4 The Cash Flows of Leasing 573
21.5 A Detour for Discounting
and Debt Capacity with
Corporate Taxes 575
Present Value of Riskless Cash Flows 575
Optimal Debt Level and Riskless Cash Flows 576
21.6 NPV Analysis of the
Lease-versus-Buy Decision 577
The Discount Rate 577
21.7 Debt Displacement
and Lease Valuation 578
The Basic Concept of Debt Displacement 578
Optimal Debt Level in the Xomox Example 579
21.8 Does Leasing Ever Pay The Base Case 581
21.9 Reasons for Leasing 582
Good Reasons for Leasing 582
Bad Reasons for Leasing 585
21.10 Some Unanswered Questions 586
Are the Uses of Leases
and Debt Complementary 586
Why Are Leases Offered by Both
Manufacturers and Third-Party Lessors 586
Why Are Some Assets Leased More
Than Others 587
Summary and Conclusions 587
Questions and Problems 588
PART VI Options, Futures, and Corporate Finance
Chapter 22
Options and Corporate Finance 591
22.1 Options 591
22.2 Call Options 592
The Value of a Call Option at Expiration 592
22.3 Put Options 593
The Value of a Put Option at Expiration 593
22.4 Selling Options 595
22.5 Option Quotes 596
22.6 Combinations of Options 597
22.7 Valuing Options 600
Bounding the Value of a Call 600
The Factors Determining Call Option Values 602
A Quick Discussion of Factors Determining Put Option Values 605
22.8 An Option Pricing Formula 605
A Two-State Option Model 606
The Black–Scholes Model 608
22.9 Stocks and Bonds as Options 613
The Firm Expressed In Terms of
Call Options 614
The Firm Expressed in Terms of Put Options 615
A Resolution of the Two Views 616
A Note about Loan Guarantees 617
22.10 Options and Corporate Decisions:
Some Applications 618
Mergers and Diversification 618
Options and Capital Budgeting 620
22.11 Investment in Real Projects
and Options 622
Summary and Conclusions 625
Questions and Problems 625
Mini Case: Clissold Industries Options 634
Chapter 23
Options and Corporate Finance: Extensions and Applications 636
23.1 Executive Stock Options 636
Why Options 636
Valuing Executive Compensation 637
23.2 Valuing a Start-Up 640
23.3 More about the Binomial Model 643
Heating Oil 643
23.4 Shutdown and Reopening Decisions 649
Valuing a Gold Mine 649
The Abandonment and Opening Decisions 650
Valuing the Simple Gold Mine 652
Summary and Conclusions 656
Questions and Problems 656
Mini Case: Exotic Cuisines’
Employee Stock Options 659
Chapter 24
Warrants and Convertibles 660
24.1 Warrants 660
24.2 The Difference between Warrants
and Call Options 661
How the Firm Can Hurt Warrant Holders 664
24.3 Warrant Pricing and the
Black–Scholes Model 664
24.4 Convertible Bonds 666
24.5 The Value of Convertible Bonds 666
Straight Bond Value 666
Conversion Value 667
Option Value 668
24.6 Reasons for Issuing Warrants and Convertibles 669
Convertible Debt versus Straight Debt 669
Convertible Debt versus Common Stock 670
The “Free Lunch” Story 671
The “Expensive Lunch” Story 672
A Reconciliation 672
24.7 Why Are Warrants and
Convertibles Issued 672
Matching Cash Flows 672
Risk Synergy 673
Agency Costs 673
Backdoor Equity 674
24.8 Conversion Policy 674
Summary and Conclusions 675
Questions and Problems 676
Chapter 25
Derivatives and Hedging Risk 677
25.1 Derivatives, Hedging, and Risk 677
25.2 Forward Contracts 678
25.3 Futures Contracts 679
25.4 Hedging 683
25.5 Interest Rate Futures Contracts 685
Pricing of Treasury Bonds 685
Pricing of Forward Contracts 686
Futures Contracts 687
Hedging in Interest Rate Futures 688
25.6 Duration Hedging 692
The Case of Zero Coupon Bonds 692
The Case of Two Bonds with the Same
Maturity but with Different Coupons 693
Duration 694
Matching Liabilities with Assets 696
25.7 Swaps Contracts 698
Interest Rate Swaps 699
Currency Swaps 700
Credit Default Swaps 701
Exotics 701
25.8 Actual Use of Derivatives 702
Summary and Conclusions 704
Questions and Problems 704
Mini Case: Williamson Mortgage, Inc. 708
PART VII Short-Term Finance
Chapter 26
Short-Term Finance and.Planning 709
26.1 Tracing Cash and Net Working Capital 710
26.2 The Operating Cycle
and the Cash Cycle 711
Defining the Operating and Cash Cycles 712
The Operating Cycle and the
Firm’s Organization Chart 714
Calculating the Operating and Cash Cycles 714
Interpreting the Cash Cycle 717
A Look at Operating and Cash Cycles 717
26.3 Some Aspects of Short-Term
Financial Policy 718
The Size of the Firm’s Investment
in Current Assets 719
Alternative Financing Policies for Current Assets 720
Which Is Best 722
26.4 Cash Budgeting 724
Cash Outflow 725
The Cash Balance 726
26.5 The Short-Term Financial Plan 726
Unsecured Loans 726
Secured Loans 727
Other Sources 727
Summary and Conclusions 727
Questions and Problems 728
Mini Case: Keafer Manufacturing Working
Capital Management 730
Chapter 27
Cash Management 731
27.1 Reasons for Holding Cash 731
The Speculative and Precautionary Motives 731
The Transaction Motive 732
Compensating Balances 732
Costs of Holding Cash 732
Cash Management versus Liquidity Management 732
27.2 Understanding Float 733
Disbursement Float 733
Collection Float and Net Float 734
Float Management 735
Electronic Data Interchange and Check 21:
The End of Float 738
27.3 Cash Collection and Concentration 739
Components of Collection Time 739
Cash Collection 740
Lockboxes 740
Cash Concentration 741
Accelerating Collections: An Example 742
27.4 Managing Cash Disbursements 744
Increasing Disbursement Float 744
Controlling Disbursements 745
27.5 Investing Idle Cash 746
Temporary Cash Surpluses 746
Characteristics of Short-Term Securities 747
Some Different Types of Money Market Securities 747
Summary and Conclusions 748
Questions and Problems 749
Mini Case: Cash Management at
Richmond Corporation 751

Chapter 28
Credit and Inventory Management 753
28.1 Credit and Receivables 753
Components of Credit Policy 754
The Cash Flows from Granting Credit 754
The Investment in Receivables 754
28.2 Terms of the Sale 755
The Basic Form 755
The Credit Period 755
Cash Discounts 757
Credit Instruments 758
28.3 Analyzing Credit Policy 759
Credit Policy Effects 759
Evaluating a Proposed Credit Policy 759
28.4 Optimal Credit Policy 761
The Total Credit Cost Curve 762
Organizing the Credit Function 763
28.5 Credit Analysis 763
When Should Credit Be Granted 764
Credit Information 765
Credit Evaluation and Scoring 766
28.6 Collection Policy 766
Monitoring Receivables 766
Collection Effort 767
28.7 Inventory Management 767
The Financial Manager and Inventory Policy 768
Inventory Types 768
Inventory Costs 768
28.8 Inventory Management Techniques 769
The ABC Approach 769
The Economic Order Quantity Model 770
Extensions to the EOQ Model 774
Managing Derived-Demand Inventories 774
Summary and Conclusions 776
Questions and Problems 777
PART VIII Special Topics
Chapter 29
Mergers, Acquisitions, and Divestitures 778
29.1 The Basic Forms of Acquisitions 778
Merger or Consolidation 778
Acquisition of Stock 779
Acquisition of Assets 779
A Classification Scheme 780
A Note about Takeovers 780
29.2 Synergy 781
29.3 Sources of Synergy 782
Revenue Enhancement 782
Cost Reduction 783
Tax Gains 785
Reduced Capital Requirements 787
29.4 Two Financial Side Effects of
Acquisitions 788
Earnings Growth 788
Diversification 789
29.5 A Cost to Stockholders
from Reduction in Risk 790
The Base Case 790
Both Firms Have Debt 790
How Can Shareholders Reduce Their Losses
from the Coinsurance Effect 792
29.6 The NPV of a Merger 792
Cash 792
Common Stock 794
Cash versus Common Stock 795
29.7 Friendly versus Hostile Takeovers 796
29.8 Defensive Tactics 798
Deterring Takeovers before Being in Play 798
Deterring a Takeover after the Company Is in Play 799
29.9 Have Mergers Added Value 801
Returns to Bidders 803
Target Companies 804
The Managers versus the Stockholders 804
29.10 The Tax Forms of Acquisitions 806
29.11 Accounting for Acquisitions 808
29.12 Going Private and Leveraged Buyouts 809
29.13 Divestitures 810
Sale 810
Spin-Off 810
Carve-Out 811
Tracking Stocks 811
Summary and Conclusions 812
Questions and Problems 812
Chapter 30
Financial Distress 815
30.1 What Is Financial Distress 815
30.2 What Happens in Financial Distress 817
30.3 Bankruptcy Liquidation
and Reorganization 819
Bankruptcy Liquidation 819
Bankruptcy Reorganization 821
30.4 Private Workout or Bankruptcy:
Which Is Best 824
The Marginal Firm 824
Holdouts 825
Complexity 825
Lack of Information 825
30.5 Prepackaged Bankruptcy 825
30.6 Predicting Corporate Bankruptcy:
The Z-Score Model 827
Summary and Conclusions 829
Questions and Problems 829
Chapter 31
International Corporate Finance 831
31.1 Terminology 832
31.2 Foreign Exchange Markets
and Exchange Rates 832
Exchange Rates 833
31.3 Purchasing Power Parity 838
Absolute Purchasing Power Parity 838
Relative Purchasing Power Parity 839
31.4 Interest Rate Parity, Unbiased
Forward Rates, and the
International Fisher Effect 841
Covered Interest Arbitrage 841
Interest Rate Parity 842
Forward Rates and Future Spot Rates 843
Putting It All Together 844
31.5 International Capital Budgeting 845
Method 1: The Home Currency Approach 846
Method 2: The Foreign Currency Approach 847
Unremitted Cash Flows 847
The Cost of Capital for International Firms 848
31.6 Exchange Rate Risk 848
Short-Term Exposure 848
Long-Term Exposure 849
Translation Exposure 850
Managing Exchange Rate Risk 851
31.7 Political Risk 851
Summary and Conclusions 852
Questions and Problems 853
Mini Case: East Coast Yachts Goes
International 855
Appendix A: Mathematical Tables 856
Appendix B: Solutions to Selected End-of-Chapter Problems 865
Glossary 868