Test Bank for Corporate Finance, 2nd Edition: Jonathan Berk

This is completed downloadable of Test Bank for Corporate Finance, 2nd Edition: Jonathan Berk

Product Details:

• ISBN-10 ‏ : ‎ 9780136089438
• ISBN-13 ‏ : ‎ 978-0136089438
• Author: Jonathan Berk

Using the unifying valuation framework based on the Law of One Price, top researchers Jonathan Berk and Peter DeMarzo set the new standard for corporate finance textbooks. Corporate Finance blends coverage of time-tested principles and the latest advancements with the practical perspective of the financial manager. With this ideal melding of the core with modern topics, innovation with proven pedagogy, Berk and DeMarzo establish the new canon in finance.

The second edition reflects the constantly changing world of finance, including information on the financial crisis of 2007, new behavioral finance research, and updated practitioner interviews.

For programs and professors who would like a streamlined book that is specifically tailored to the topics covered in the first one-semester course, Corporate Finance: The Core 2^nd edition is also available by Jonathan Berk and Peter DeMarzo.

Table of Content:

PART I Introduction
Chapter 1	The Corporation
1.1 The Four Types of Firms
Sole Proprietorships
Partnerships
Interview with David Viniar
Limited Liability Companies
Corporations
Tax Implications for Corporate Entities
1.2 Ownership Versus Control of Corporations
The Corporate Management Team
Ownership and Control of Corporations
Shareholder Activism and Voting Rights 
1.3 The Stock Market
The Largest Stock Markets
NYSE
NASDAQ
	Summary
	Key Terms
	Further Reading
	Problems
Chapter 2	Introduction to Financial Statement Analysis
2.1 The Disclosure of Financial Information
Preparation of Financial Statements
International Financial Reporting Standards
Types of Financial Statements
2.2 The Balance Sheet
Assets
Liabilities
Stockholders' Equity
Balance Sheet Analysis
2.3 The Income Statement
Earnings Calculations
Income Statement Analysis
Common Mistake Mismatched Ratios
2.4 The Statement of Cash Flows
Operating Activity
Investment Activity
Financing Activity 
2.5 Other Financial Statement Information
Interview with Sue Frieden
Management Discussion and Analysis
Statement of Stockholders' Equity
Notes to the Financial Statements
2.6 Accounting Manipulation
Enron
World Com
Sarbanes-Oxley Act
	Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 3	Arbitrage and Financial Decision Making
3.1 Valuing Costs and Benefits
Using Market Prices to Determine Cash Values
When Competitive Market Prices Are Not Available
3.2 Interest Rates and the Time Value of Money
The Time Value of Money
The Interest Rate: An Exchange Rate Across Time
3.3 Present Value and the NVP Decision Rule
Net Present Value
The NVP Decision Rule 
NVP and Individual Preferences
3.4 Arbitrage and the Law of One Price
An Old Joke
Arbitrage
Law of One Price
3.5 No-Arbitrage and Security Prices
Valuing a Security
Determining the No-Arbitrage Price
NASDAQ SOES Bandits
Determining the Interest Rate from Bond Prices
The NVP of Trading Securities
Valuing a Portfolio
Stock Index Arbitrage
3.6 The Price of Risk
Risky versus Risk-free Cash Flows
Risk Aversion and Risk Premium
The No-Arbitrage Price of a Risky Security
Risk Premiums Depend on Risk
Risk is Relative to the Overall Market
Risk, Return, and Market Prices
3.7 Arbitrage with Transactions Costs
	Summary
	Key Terms
	Further Reading
	Problems
PART II Tools
Chapter 4	The Time Value of Money
4.1 The Timeline
4.2 The Three Rules of Time Travel
Comparing and Combining Values
Moving Cash Flows Forward in Time
Moving Cash Flows Back in Time
Applying the Rules of Time Travel
4.3 The Power of Compounding: An Application
4.4 Valuing a Stream of Cash Flows
4.5 The Net Present Value of a Stream of Cash Flows
4.6 Perpetuities, Annuities, and Other Special Cases
Perpetuities
Historical Examples of Perpetuities
Common Mistake Discounting One Too Many Times
Annuities
Growing Cash Flows
4.7 Solving Problems with a Spreadsheet Program
4.8 Solving for Variables Other Than Present Value or Future Value
Solving for the Cash Flows
Internal Rate of Return
Solving for the Number of Periods
Common Mistake Excel's NVP and IRR Functions
Rule of 72
	Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 5	Interest Rates
	5.1	Interest Rate Quotes and Adjustments
			The Effective Annual Rate
			Adjusting the Discount Rate to Different Time Periods
			Annual Percentage Rates
			Application: Discount Rates and Loans
	5.2	The Determinants of Interest Rates
			Inflation and Real Versus Nominal Rates
			Investment and Interest Rate Policy
			The Yield Curve and Discount Rates
Common Mistake Using the Annuity Formula When Discount Rates Vary
The Yield Curve and the Economy 
	5.3	Risk and Taxes
			Risk and Interest Rates
			After-Tax Interest Rates
	5.4	The Opportunity Cost of Capital 
Summary
	Key Terms
	Further Reading
	Problems
Chapter 6	Investment Decision Rules
6.1 NVP and Stand-Alone Projects
NVP Rule
Measuring Sensitivity with IRR
Alternative Rule versus NVP Rule
6.2 Alternative Decision Rules
The Payback Rule
The Internal Rate of Return Rule
Economic Profit or EVA
Interview with Joel M. Stern
			Why Do Rules Other than the NVP Rule Persist?
6.3 Mutually Exclusive Investment Opportunities
Differences in Scale
Timing of the Cash Flows
Incremental IRR Rule
6.4 Project Selection with Resource Constraints
Evaluation of Projects with Different Resource Requirements 
Profitability Index
Shortcomings of the Profitability Index
	Summary
	Key Terms
	Further Reading
	Problems
	Data Case
PART III Basic Valuation
Chapter 7	Fundamentals of Capital Budgeting
7.1 Forecasting Earnings
Revenue and Cost Estimates
Interview with Dick Grannis
Incremental Earnings Forecast
Indirect Effects on Incremental Earnings
The Opportunity Cost of an Idle Asset
Sunk Costs and Incremental Earnings
Common Mistake The Opportunity of an Idle Asset
Real-World Complexities
The Sunk Cost Fallacy
7.2 Determining Free Cash Flow and NVP
Calculating the Free Cash Flow from Earnings
Calculating Free Cash Flow Directly
Calculating the NVP
Choosing Among Alternatives
Further Adjustments to Free Cash Flow
7.3 Analyzing the Project
Break-Even Analysis
Sensitivity Analysis
Scenario Analysis
	Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 8	Valuing Bonds
	8.1	Bond Cash Flows, Prices, and Yields
			Bond Terminology
			Zero-Coupon Bonds
			Coupon Bonds
	8.2	Dynamic Behavior of Bond Prices
			Discounts and Premiums
			Time and Bond Prices
			Clean and Dirty Prices for Coupon Bonds
			Interest Rate Changes and Bond Prices
	8.3	The Yield Curve and Bond Arbitrage
			Replicating a Coupon Bond
			Valuing a Coupon Bond Using Zero-Coupon Yields
			Coupon Bond Yields
			Treasury Yield Curves
	8.4	Corporate Bonds
			Corporate Bond Yields
			Interview with Lisa Black
			Bond Ratings
			Corporate Yield Curves
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 9	Valuing Stocks
	9.1	Stock Prices, Returns, and the Investment Horizon
			A One-Year Investor
			Dividend Yields, Capital Gains, and Total Returns
			A Multiyear Investor
	9.2	The Dividend-Discount Model
			Constant Dividend Growth
			Dividends Versus Investment and Growth
			Changing Growth Rates
			Interview with Marilyn Fedak
			Limitations of the Dividend-Discount Model
			John Burr Williams' Theory of Investment Value
	9.3	Total Payout and Free Cash Flow Valuation Models
			Share Repurchases and the Total Payout Model
			The Discounted Free Cash Flow Model
	9.4	Valuation Based on Comparable Firms
			Valuation Multiples
			Limitations of Multiples
			Comparison with Discounted Cash Flow Methods
			Stock Valuation Techniques: The Final Word
	9.5	Information, Competition, and Stock Prices
			Information in Stock Prices
			Competition and Efficient Markets
			Lessons for Investors and Corporate Managers
			The Efficient Markets Hypothesis Versus No Arbitrage
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
PART IV Risk and Return
Chapter 10	Capital Markets and the Pricing of Risk
10.1 A First Look at Risk and Return
10.2 Common Measures of Risk and Return
Probability Distributions
Expected Return
Variance and Standard Deviation
10.3 Historical Returns of Stocks and Bonds
Computing Historical Returns
Average Annual Returns
The Variance and Volatility of Returns
Using Past Returns to Predict the Future: Estimation Error
Arithmetic Average Returns Versus Compound Annual Returns
10.4 The Historical Tradeoff between Risk and Return
The Returns of Large Portfolios
The Returns of Individual Stocks
10.5 Common Versus Independent Risk
10.6 Diversification in Stock Portfolios
Firm-Specific Versus Systematic Risk
No Arbitrage and the Risk Premium
Common Mistake A Fallacy of Long-Run Diversification
10.7 Estimating the Expected Return
Measuring Systematic Risk
Estimating the Risk Premium
10.8 Risk and the Cost of Capital
10.9 Capital Market Efficiency
Notions of Efficiency
Empirical Evidence on Capital Market Competition
Interview with Randall Lert
	Summary
	Key Terms
	Further Reading
	Problems
Data Case
Chapter 11	Optimal Portfolio Choice
	11.1	The Expected Return of a Portfolio
	11.2	The Volatility of a Two-Stock Portfolio
			Combining Risks
			Determining Covariance and Correlation
Computing the Variance, Covariance and Correlation in Microsoft Excel
Computing a Portfolio's Variance and Volatility
	11.3	The Volatility of a Large Portfolio
Diversification with an Equally Weighted Portfolio of Many Stocks
Diversification with General Portfolios
	11.4	Risk Versus Return: Choosing an Efficient Portfolio
			Efficient Portfolios with Two Stocks
			The Effect of Correlation
			Short Sales
			The Mechanics of a Short Sale
			Risk versus Return: Many Stocks
	11.5	Risk-Free Saving and Borrowing
			Investing in Risk-Free Securities
Borrowing and Buying Stocks on Margin
Identifying the Tangent Portfolio
	11.6	The Efficient Portfolio and the Cost of Capital
			How to Improve a Portfolio: Beta and the Required Return
			Expected Returns and the Efficient Portfolio 
			Cost of Capital 
			Nobel Prizes Harry Markowitz and James Tobin
			Interview with Jonathan Clements
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 12	The Capital Asset Pricing Model
	12.1	The Efficiency of the Market Portfolio
			The CAPM Assumptions
			Security Demand Must Equal Supply
			Optimal Investing: The Capital Market Line
	12.2	Determining the Risk Premium
			Market Risk and Beta
			The Security Market Line
			Alpha
			Summary of the Capital Asset Pricing Model
	12.3 	The Market Portfolio
			Value-Weighted Portfolios
			Common Stock Market Indexes
			Interview With John Bogle
			Index Funds
	12.4 Determining Beta
			Estimating Beta from Historical Returns 
			Why Not Estimate Expected Returns Directly?
			Using Linear Regression
	12.5 Extending the CAPM
			Investor Information and Rational Expectations
	12.6 The CAPM in Practice
			Forecasting Beta
			The Security Market Line
			Evidence Regarding the CAPM
			Nobel Prize William Sharpe on the CAPM
			The Bottom Line on the CAPM
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 13	Alternative Models of Systematic Risk
	13.1	The Efficiency of the Market Portfolio
			Market Capitalization 
			Past Returns
	13.2	Implication of Positive Alphas
			Proxy Error
			Non-tradeable Wealth
			Common Mistake Investing in Own Company Stock
	13.3 Multifactor Models of Risk
			Constructing the Efficient Portfolio
			Building a Multifactor Model
			Selecting the Portfolios
			Interview with Rex A. Sinquefield
Calculating the Cost of Capital Using the Fama-French-Carhart Factor Specification
	13.4	Characteristic Variable Models of Expected Returns
	13.5	Methods Used in Practice
Summary
	Key Terms
	Further Reading
	Problems
	
PART V Capital Structure
Chapter 14	Capital Structure in a Perfect Market
	14.1	Equity Versus Debt Financing 
			Financing a Firm with Equity
			Financing a Firm with Debt and Equity
			Effect of Leverage on Risk and Return
	14.2	Modigliani-Miller I: Leverage, Arbitrage, and Firm Value
			MM and the Law of One Price
			MM and the Real World
			Homemade Lemonade 
			The Market Value Balance Sheet 
			Application: A Leveraged Recapitalization
	14.3	Modifliani -Miller II: Leverage, Risk, and the Cost of Capital
			Leverage and the Equity Cost of Capital
			Capital Budgeting and the Weighted Average Cost of Capital
			Common Mistake Is Debt Better Than Equity?
			Levered and Unlevered Betas
			Cash and Net Debt
			Microsoft's Dividend, Cash, and Beta
	14.4	Capital Structure Fallacies
			Leverage and Earnings per Share
			Equity and Dilution
	14.5	MM: Beyond the Propositions
			Nobel Prize Franco Modigliani and Merton Miller
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 15	Debt and Taxes
	15.1	The Interest Tax Deduction
	15.2	Valuing the Interest Tax Shield
			The Interest Tax Shield and Firm Value
			The Interest Tax Shield with Permanent Debt
			Pizza and Taxes
			The Weighted Average Cost of Capital with Taxes
	15.3	Recapitalizing to Capture the Tax Shield
			The Tax Benefit
			The Share Repurchase
			No Arbitrage Pricing
			Analyzing the Recap: The Market Value Balance Sheet
	15.4	 Personal Taxes
			Including Personal Taxes in the Interest Tax Shield
			Valuing the Interest Tax Shield with Personal Taxes
			Determining the Actual Tax Advantage of Debt
			Cutting the Dividend Tax Rate
	15.5	Optimal Capital Structure with Taxes
			Do Firms Prefer Debt?
			Limits to the Tax Benefit of Debt
			Growth and Debt
			Other Tax Shields
			The Low Leverage Puzzle
			Employee Stock Options
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 16	Financial Distress, Managerial Incentives, and Information
	16.1	Default and Bankruptcy in a Perfect Market
			Armin Industries: Leverage and the Risk of Default
			Bankruptcy and Capital Structure
	16.2	The Cost of Bankruptcy and Financial Distress
			The Bankruptcy Code
			Direct Costs of Bankruptcy
			Indirect Costs of Financial Distress
	16.3	Financial Distress Costs and Firm Values
			Armin Industries: The Impact of Financial Distress Costs
			Who Pays for Financial Distress Costs?
	16.4	Optimal Capital Structure: The Tradeoff Theory
			Determinants of the Present Value of Distress Costs
			Optimal Leverage
	16.5	Exploiting Debt Holders: The Agency Costs of Leverage
			Over-investment
			Under-investment
			Cashing Out
			Agency Costs and the Value of Leverage
			Debt Maturity and Covenants
	16.6	Motivating Managers: The Agency Benefits of Leverage 
			Concentration of Ownership
			Reduction of Wasteful Investment
			Excessive Perks and Corporate Scandals
			Leverage and Commitment
	16.7	Agency Costs and the Tradeoff Theory
			The Optimal Debt Level
			Debt Levels in Practice
	16.8	Asymmetrical Information and Capital Structure
			Leverage as a Credible Signal
			Issuing Equity and Adverse Selection
			Nobel Prize The 2001 Nobel Prize in Economics 
			Implications for Equity Issuance
			Implications for Capital Structure
	16.9	Capital Structure: The Bottom Line
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 17	Payout Policy
	17.1	Distributions to Shareholders
			Dividends 
			Share Repurchases
	17.2	Comparison of Dividends and Share Repurchases
			Alternative Policy 1: Pay Dividend with Excess Cash
			Alternative Policy 2: Share Repurchase (No Dividend)
			Common Mistake Repurchases and the Supply of Shares
			Alternative Policy 3: High Dividend (Equity Issue)
			Modigliani-Miller and the Dividend Policy Irrelevance
			Common Mistake The Bird in Hand Fallacy
			Dividend Policy with Perfect Capital Markets
	17.3	The Tax Disadvantage of Dividends
			Taxes on Dividends and Capital Gains
			Optimal Dividend Policy with Taxes
	17.4	Dividend Capture and Tax Clienteles
			The Effective Dividend Tax Rate
			Tax Differences Across Investors
			Clientele Effects
	17.5	Payout Versus Retention of Cash 
			Retaining Cash with Perfect Capital Markets
			Taxes and Cash Retention
			Adjusting for Investor Taxes
			Issuance and Agency Costs
	17.6	Signaling with Payout Policy
			Dividend Smoothing
			Dividend Signaling
			Royal and SunAlliance's Dividend Cut
			Signaling and Share Repurchases
	17.7	Stock Dividends, Splits, and Spin-offs
			Stock Dividends and Splits
			Berkshire Hathaway's A & B Shares
			Spin-offs
Summary
	Key Terms
	Further Reading
	Problems
Data Case
PART VI Valuation
Chapter 18	Capital Budgeting and Valuation with Leverage
	18.1	Overview
	18.2	The Weighted Average Cost of Capital Method
			Using the WACC to Value a Project
			Summary of the WACC Method
			Implementing a Constant Debt-Equity Ratio
	18.3	The Adjusted present Value Method
			The Unlevered Value of the Project
			Valuing the Interest Tax Shield
			Summary of the APV Method
	18.4	The Flow-to-Equity Method
			Calculating the Free Cash Flow to Equity
			Valuing Equity Cash Flows
			Summary of the Flow-to-Equity Method
			What Counts as "Debt"?
	18.5	Project-Based Costs of Capital
			Estimating the Unlevered Cost of Capital
			Project Leverage and the Equity Cost of Capital
			Determining the Incremental Leverage of a Project
			Common Mistake Re-levering the WACC
	18.6	APV with Other Leverage Policies
			Constant Interest Coverage Ratio
			Predetermined Debt Levels
			A Comparison of Methods
	18.7	Other Effects of Financing
			Issuance and Other Financing Costs
			Airline Loan Guarantees after September 11, 2001
			Security Mispricing
			Financial Distress and Agency Costs
	18.8	Advanced Topics in Capital Budgeting
			Periodically Adjusted Debt
			Leverage and the Cost of Capital
			The WACC or FTE Method with Changing Leverage
			Personal Taxes
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 19	Case Study: Valuation and Financial Modeling
	19.1	Valuation Using Comparables
	19.2	The Business Plan
			Operational Improvements
			Capital Expenditures: A Needed Expansion
			Working Capital Management
			Capital Structure Changes: Levering Up
	19.3	Building the financial Model
			Forecasting Earnings
			Working Capital Requirements
			Forecasting Free Cash Flow
			The balance Sheet and Statement of Cash Flows (Optional) 
	19.4	Estimating the Cost of Capital
			CAPM-Based Estimation
			Unlevering Beta
			Ideko's Unlevered Cost of Capital 
	19.5	Valuing the Investment
			The Multiples Approach to Continuation Value
			The Discounted Cash Flow Approach to Continuation Value
			Common Mistake Continuation Values and Long-Run Growth 
			APV Valuation of Ideko Equity
			Common Mistake Missing Assets or Liabilities
			A Reality Check
			IRR and Cash Multiples
	19.6	Sensitivity Analysis
Summary
	Key Terms
	Further Reading
	Problems
PART VII Options
Chapter 20	Financial Options
	20.1	Options Basics
			Understanding Options Contracts
			Interpreting Stock Options Quotations
			Options on Other Financial Securities
	20.2	Valuing Options at Expiration
			Long Position in an Option Contract
			Short Position in an Option Contract
			Profits for Holding an Option to Expiration 
			Returns for Holding an Option to Expiration
			Combinations of Options
	20.3	Put-Call Parity
	20.4	Factors Affecting Options Prices
			Arbitrage Bounds on Options Prices
			Options Prices and the Exercise Date
			Options Prices and Volatility 
	20.5	Exercising Options Early
			Non-Dividend-Paying Stocks
			Dividend-Paying Stocks
	20.6	Options and Corporate Finance
			Equity as an Option
			Debt as an Option
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 21	Option Valuation
	21.1	The Binomial Option pricing Model
			A Two-State Single-Period Model
			A Multiperiod Model
	21.2	The Black-Scholes Option Pricing Model
			The Black-Scholes Formula
			Common Mistake Valuing Employee Stock Options
			Implied Volatility
			The Replicating Portfolio
	21.3	Risk-Neutral Probabilities
			A Risk-Neutral Two-State Model
			Implications of the Risk-Neutral World
			Risk-Neutral Probabilities and Option Pricing
	21.4	Risk Return of an Option
	21.5	Beta of Risky Debt
Summary
	Key Terms
	Further Reading
	Problems
Chapter 22	Real Options
	22.1	Real Versus Financial Options
	22.2	Decision Tree Analysis
			Mapping Uncertainties on a Decision Tree
			Real Options
	22.3	The Optimal Time to Undertake an Investment Opportunity
			Why Are There Empty Lots in Built-up Areas of Big Cities?
	22.4	Growth Options
			Valuing the Growth Potential of a Firm
			Staged Investment
			Interview with Scott Mathews
	22.5	Abandonment Options
22.6	Application: Deciding Between Mutually Exclusive Investments of Different Lengths
		NVP of Each Design
		NVP if Costs Rise
		NVP if Future Costs Are Uncertain
		Equivalent of Annual Benefit Method
22.7	Rules of Thumb
		The Profitability Index Rule
		The Hurdle Rate Rule
		Applying Hurdle Rates and the Profitability Index Simultaneously 
Summary
	Key Terms
	Further Reading
	Problems
PART VIII Long-Term Financing
Chapter 23	The Mechanics of Raising Equity Capital
	23.1	Equity Financing for Private Companies
			Sources of Funding
			Interview with Joseph Rice
			Outside Investors
			Exiting an Investment in a Private Company
	23.2	The Initial Public Offering
			Advantages and Disadvantages of Going Public
			Types of Offereings
			Google's IPO
			The Mechanics of an IPO
			IPO Puzzles
			Cyclicality
			Cost of Issuing an IPO
			Long-Run Underperformance
	23.3	The Seasoned Equity Offering
			The Mechanics of an SEO
			Price Reaction
			Costs
Summary
	Key Terms
	Further Reading
	Problems
Chapter 24	Debt Financing
	24.1	Corporate Debt
			Public Debt
			Private Debt
	24.2	Other Types of Debt
			Sovereign Debt
			Agency Securities
			Municipal Bonds
	24.3	Bond Covenants
	24.4	Repayment Provisions
			Call Provisions
			New York City Calls Its Municipal Bonds
			Sinking Funds
			Convertible Provisions
Summary
	Key Terms
	Further Reading
	Problems
Chapter 25	Leasing
	25.1	The Basics of Leasing
			Examples of Lease Transactions
			Lease Payments and residual Values
			Leases Versus Loans
			End-of-Term Lease Options
			Calculating Auto Lease Payments
			Other Lease Provisions
	25.2	Accounting, Tax, and Legal Consequences of Leasing
			Lease Accounting
			Operating Leases at Alaska Air Group
			The Tax Treatment of Leases
			Leases and Bankruptcy
			Synthetic Leases 
	25.3	The Leasing Decision
			Cash Flows for a True Tax Lease
			Lease Versus Buy: An Unfair Comparison
			Lease Versus Borrow
			Evaluating a True Tax Lease
			Evaluating a Non-tax Lease
	25.4	Reasons for Leasing
			Valid Arguments for Leasing
			Suspect Arguments for Leasing
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
PART IX Short-Term Financing
Chapter 26	Working Capital Management
	26.1	Overview of Working Capital
			The Cash Cycle
			The Operating Cycle
			Firm Value and Working Capital
	26.2	Trade Credit
			Trade Credit Terms
			Trade Credit and Market Frictions
			Trade Credit Management
	26.3	Receivables Management
			Determining the Credit Policy
			Monitoring Accounts Receivable
	26.4	Payables Management
			Determining Accounts Payable Days Outstanding 
			Stretching Accounts Payable
	26.5	Inventory Management
			Benefits of Holding Inventory
			Costs of Holding Inventory
	26.6	Cash Management
			Motivation for Holding Cash
			Alternative Investments
			Cash Balances
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 27	Short-Term Financial Planning
	27.1	Forecasting Short-Term Financing Needs
			Seasonalities
			Negative Cash Flow Shocks
			Positive Cash Flow Shocks
	27.2	The Matching Principle
			Permanent Working Capital
			Temporary Working Capital
			Financing Policy Choices
	27.3	Short-Term Financing with Bank Loans
			Single, End-of-Period Payment Loan
			Line of Credit
			Bridge Loan
			Common Loan Stipulation and Fees
	27.4	Short-Term Financing with Commercial Paper
	27.5	Short-Term Financing with Secured Financing
			Accounts Receivable as Collateral
			A Seventeenth-Century Financing Solution
			Inventory as Collateral
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
PART X Special Topics
Chapter 28	Mergers and Acquisitions
	28.1	Background and Historical Trends
	28.2	Market Reaction to a Takeover
	28.3	Reasons to Acquire
			Economies of Scale
			Vertical Integration
			Expertise
			Monopoly Gains
			Efficiency Gains
			Operating Losses
			Diversification
			Earnings Growth
	28.4	The Takeover Process
			Valuation
			The Offer
			Merger "Arbitrage"
			Tax and Accounting Issues
			Board and Shareholder Approval
			Poison Pills
			Staggered Boards
			White Knights
			Golden Parachutes
			Recapitalization
			Other Defense Strategies
			Regulatory Approval 
			Weyerhaeuser's Hostile Bid for Willamette Industries
	28.5	Who Gets the Value Added from a Takeover?
			The Free Rider Problem
			Toeholds
			The Leveraged Buyout
			The Leveraged Buyout of RJR-Nabisco by KKR
			The Freezeout Merger 
			Competition
Summary
	Key Terms
	Further Reading
	Problems
	Data Case
Chapter 29	Corporate Governance
	29.1	Corporate Governance and Agency Costs
	29.2	Monitoring by the Board of Directors
			Types of Directors
			Board Independence 
			Board Size and Performance
	29.3	Compensation Policies
			Stock Options
			Pay and Performance Sensitivity
	29.4	Managing Agency Conflict
			Direct Action by Shareholders
			Shareholder Activism at Blaockbuster
			Management Entrenchment
			The Threat of Takeover
	29.5	Regulation
			The Sarbanes-Oxley Act
			Interview with Lawrence E. Harris
			The Cadbury Commission
			Insider Trading
			Martha Stewart and ImClone
	29.6	Corporate Governance Around the World
			Protection of Shareholder Rights
			Controlling Owners and Pyramids
			The Stakeholder Model
			Cross-holdings
	29.7	The Tradeoff of Corporate Governance
Summary
	Key Terms
	Further Reading
	Problems
	
Chapter 30	Risk Management
	30.1	Insurance
			The Role of Insurance: An Example
			Insurance Pricing in a Perfect Market
			The Value of Insurance
			The Costs of Insurance
			The Insurance Decision
	30.2	Commodity Price Risk
			Hedging with Vertical Integration and Storage
			Hedging with Long-Term Contracts
			Hedging with Futures Contracts
			Common Mistake Hedging Risk	
			Deciding to Hedge Commodity Price Risk
			Differing Hedging Strategies
	30.3	Exchange Rate Risk
			Exchange Rate Fluctuations
			Hedging with Forward Contracts
			Cash and Carry and the Pricing of Currency Forwards
			Hedging with Options
	30.4	Interest Rate Risk
			Interest Rate Risk Measurements: Duration
			Duration-Based Hedging
			The Savings and Loan Crisis
			Swap-Based Hedging
Summary
	Key Terms
	Further Reading
	Problems
Chapter 31	International Corporate Finance
	31.1	Internationally Integrated Capital Markets
	31.2	Valuation of Foreign Currency Cash Flows
			WACC Valuation Methodology in Domestic Currency
			Application: Ityesi, Inc
			Using the Law of One Price as a Robustness Check
	31.3	Valuation and International Taxation
			Single Foreign Project with Immediate Repatriation of Earnings
			Multiple Foreign Projects and Deferral of Earnings Repatriation
	31.4	Internationally Segmented Capital Markets
			Differential Access to Markets
			Macro-Level Distortions
			Implications
	31.5	Foreign Exchange Risk
			Ityesi, Inc. Revisited
			Capital Budgeting with Exchange Risk
			Summary
	Key Terms
	Further Reading
	Problems
	Data Case

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