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• Half Title
• Title
• Copyright
• Contents
• Figures
• Tables
• Corporate Snippets
• Abbreviations
• Preface
• Acknowledgements
• CHAPTER 1: Corporate Finance
• A Conceptual Introduction
• The Financial Markets
• Mortgage Financing
• Consumption Choices
• Types of Business Organizations
• L&T and Britannia
• Objectives of a Company
• Lloyds TSB and Value Maximization
• Governance
• Corporate Governance at Raymond Ltd
• Board Evaluation
• Agency Theory and the Problem of Corporate Governance
• Takeover and Managerial Performance
• Corporate Finance
• Corporate Strategy
• Hybrid Instruments
• Citibank Innovative Instrument
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CASE FOR DISCUSSION
• CHAPTER 2: Financial Markets
• Four Economic Entities
• Functions of Financial Markets
• US Institutional Funds
• Intermediation by HDFC Bank
• Incremental Capital Output Ratio (ICOR)
• Historical ICOR in India
• Exchange Risk at Wipro Ltd
• Institutional Mechanism
• Reintermediation
• The Wall Street
• Physical and Financial Assets
• Types of Financial Markets
• The Fixed Income Securities Market
• Fund Raising in the USA
• Masala Bonds
• Municipal Bonds in the USA
• Municipal Bonds Issued by PMC
• Mortgage-Backed Securities
• The Equities Market
• The Foreign Exchange Market
• Derivatives
• Debt versus Equity
• Public Offering
• IPO: Bharati
• Private Equity Investments
• Acquisition by Share Swap
• Largest IPO in the USA
• Secondary Market
• Mutual Funds
• Market Participants
• Impact Cost
• Common Perception about Financial Markets
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CASE FOR DISCUSSION
• Appendix: Bond Features
• Covenants
• Invoking Debt Covenant
• Rights in Liquidation
• Secured Credit
• Call Provision
• Traded or Non-traded Debt
• CHAPTER 3: The Time Value of Money
• Compound Interest
• Really Long Term
• Manipulation of Cash Flows
• Required Rate of Return
• Risk
• Opportunity Cost
• Annual Period for Comparison
• Time Value of Money
• Cash Flow Depiction
• Basic Calculations
• Discount Factor
• Nominal versus Real Return
• Special Considerations in Time Value of Money
• Annuity
• FV of Annuity
• Making Sense of Sports Contracts
• Kinds of Annuity
• Valuation, Time Value Tables
• Clever Use of the Time Value of Money
• Equivalence
• Practice Questions
• Future Value of an Annuity
• Period of Savings
• How Much Should You Save Every Year?
• Calculating Implied Interest Rate
• Present Value of an Annuity
• Is Your MBA Worthwhile?
• Perpetuity
• Perpetual Bonds
• Growing Perpetuity
• Valuing High Growth Rates
• Intra-year Compounding
• Continuous Compounding
• Amortizing a Loan
• Amortization Schedule
• Negative Amortization
• Period of Mortgage Loan
• How Long Will the Money Last?
• Finding the Rate of Interest
• Finding the Effective Cost of a Loan
• Payment of EMI in Advance
• Monthly Payments for Loans
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CASE FOR DISCUSSION
• CHAPTER 4: Capital Budgeting
• Capital Budgeting
• The Process
• Generation of Investment Proposals
• Generation of Cash Flows
• Evaluation
• Monitoring and Re-evaluation
• Net Present Value
• Internal Rate of Return
• NPV versus IRR
• Interim Cash Flow Investment Assumption
• Modified IRR
• Project Value Addition
• Margin of Safety
• Ease of Comprehension
• Reduction in Overall Return
• Profitability Index (PI)
• Different Techniques of Capital Budgeting
• Advances in Computational Capabilities
• Project Cash Flow
• Estimation of Project Cash Flows
• Principles of Cash Flow Determination
• The Cash Flow Principle
• Depreciation
• Incremental Principle
• Interest Exclusion Principle
• Post-Tax Principle
• Inflation
• Risk Analysis in Capital Budgeting
• KEY CONCEPTS
• CASE FOR DISCUSSION
• Appendix
• Payback Period
• Discounted Payback
• Accounting Rate of Return (ARR )
• More on NPV versus IRR
• Mutually Exclusive Projects
• Difference in Size of the Projects
• Different Project Lives
• Timing of Cash Flows
• CHAPTER 5: Risk and Return
• Greed and Fear
• Return
• Return Calculations
• Dividend Yield and Capital Gains
• Return Averages
• Risk
• Kinds of Risk
• Price/Market Risk
• Acquisition Risk
• Credit Risk
• Risk in Bank Intermediation
• Operating Risk
• Bond Risks
• Investment Risk
• Attitude to Risk
• Inflation Risk or Purchasing Power Risk
• Risk Calculation
• Capital Asset Pricing Model (CAPM)
• Required Rate of Return on Equity
• Risk Management
• Insurance
• Self-Insurance
• Hedging
• Diversification
• Strategic Corporate Risk
• Transaction Risk
• Risk of Education Abroad
• Translation Risk
• Economic or Strategic Risk
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CHAPTER 6: Valuation
• Value versus Price
• Different Facets of Value
• Valuation Methods
• Discounted Cash Flow Valuation
• Corporate Valuation
• What Is Cash Flow?
• Free Cash Flows
• Working Capital Generating Cash Flows
• Competitive Advantage Period and Residual Period
• Sensitivity Analysis
• Sensitivity in Valua
• Risk of Abuse
• Impact of Long-Term Cash Flows
• Relative Measures of Valuation
• Valuation for Acquisition
• Flow to Equity Method
• Practice
• Firm’s Balance Sheet
• Valuation of Debt
• Bond Pricing in Practice
• Debt Holdings and Bank Profitability
• Zero-Coupon Bonds
• Interest Rate and Valuation of Bonds
• Perpetual Bond
• Valuation of Equity
• No-Growth Company
• Constant Growth Company
• Public Sector Undertakings (PSU) versus Private Sector Companies: Difference in Valuation
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CASE FOR DISCUSSION
• CHAPTER 7: Capital Structure and Financing
• Risk of Debt
• Maximization of Equity Value
• Cost of Capital
• Cost of Capital and Valuation
• Unbridled Diversification
• Minimization of Cost of Capital
• Estimation of Cost of Capital
• Cost of Equity in India
• Market Value versus Book Value
• Summing It Up
• Target Capital Structure
• Use of Funds Determines Cost of Capital
• Return Variants
• Theory of Capital Structure: The Modigliani–Miller (MM) Theorem
• Financial Incentive
• Pre-publication Jitters
• Assumptions
• The Model
• Arbitrage
• Short-Selling
• Propositions
• Creating Value through Assumptions
• Taxation
• Tax Shield Value Estimation
• Personal Taxation
• Bankruptcy and Distress
• Risk Inherent in Debt Financing
• Financing
• Financing and Strategy
• Agency Cost of Free Cash Flows
• Agency Cost in Practice
• Agency Cost and Free Cash Flow
• Adjusted Present Value
• Putting It Together
• Trade-Off Theory
• Financial Distress and Rolling the Dice, Literally
• The Pecking Order Theory
• Financing Decision and Growth
• Use of Recapitalization to Increase Value
• What Happens in Practice
• Reverse Engineering
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CASE FOR DISCUSSION
• CHAPTER 8: Dividend Payout
• Policy and Practices
• Dividends
• Kinds of Dividends
• Cash Dividend
• Theory of Dividend
• Irrelevance of Dividends
• Dividend versus Stock Repurchase
• Stock Buyback: Dr Reddy’s
• Dividend and Stock Buyback: Shareholder Wealth Agnosticism
• Dividend Decision
• Lintner Model of Dividend Policy and Practice
• Signalling
• Royal & Sun Alliance’s Dividend Cut
• Factors Impacting Dividends
• Dividend Definitions
• High Dividend: Hindustan Unilever Ltd (HU L)
• Administrative Aspects
• Administrative Aspects of Dividend
• Dividend Reinvestment Plan (DRIP)
• Putting It Together
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CASE FOR DISCUSSION I
• CASE FOR DISCUSSION II
• CHAPTER 9: Leverage
• Operating Leverage
• Leverage in Different Industries
• Financial Leverage
• Leverage and Banks
• Total Leverage
• Leverage and the Financial Crisis
• KEY CONCEPTS
• CASE FOR DISCUSSION
• CHAPTER 10: Financial Derivatives
• The Concept
• Nature of Derivatives
• Kinds of Derivatives
• Forwards
• Weather Derivatives
• Futures
• The NIFTY Futures
• Options
• Option Outcomes
• Long-Term Equity Anticipation Securities
• In the Money/Out of the Money
• Settlement
• Futures on Volatility Index
• Application
• Hedging Mechanics
• Risk in Hedging
• Growth of Derivatives
• Corporate Risk Management
• Growth of Equity Derivatives
• Risk Management System by Exchanges
• Margins
• Risk in Derivatives
• Barings
• Swaps
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CHAPTER 11: International Finance
• The Foreign Exchange Market
• Currency Derivatives
• Liberalized Remittance Scheme
• Impact of Changes in Exchange Rates
• Impact of Rupee Depreciation
• BMW and Exchange Rates
• Impact on the Economy
• Exports
• Imports
• Inflation
• Debt
• Expectations
• Toyota’s Currency Woes
• Determination of Exchange Rates
• International Capital Budgeting
• Balance of Payments
• The Capital Account
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CHAPTER 12: Working Capital
• Concept of Working Capital
• Components of Current Assets
• Components of Current Liabilities
• Operating Cycle
• Industry Characteristics
• Education Industry
• Working Capital Planning
• Unsustainable Growth
• Dell Computers Ltd
• Hindustan Unilever Limited
• Credit Management and Policy
• Financing of Working Capital
• Excess Cash
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CASE FOR DISCUSSION
• CHAPTER 13: Ratio Analysis
• Return on Equity (ROE)
• Asset-Light Model
• Profitability Ratios
• Profit Margin
• Gross Margin
• Net Margin
• Return on Assets
• Return on Equity
• Return on Capital
• Asset Turnover Ratios
• Asset Turnover
• Inventory Turnover
• Receivables Turnover
• Payables Turnover
• Financial Leverage
• Debt to Assets
• Debt to Equity
• Coverage Ratios
• Interest Coverage
• Times Burden Covered
• Liquidity Ratios
• Current Ratio
• Business Transactions and Current Ratio
• Acid-Test Ratio
• Market-Price-Based Ratios
• Price Earnings Ratio
• Market Price to Book Value
• Comparative Analysis
• Ratio Analysis Application
• Limitations
• KEY CONCEPTS
• CHAPTER QUESTIONS
• CASE FOR DISCUSSION
• Appendix
• Efficient Market Hypothesis
• Indexing
• Fintech
• SingX
• Robo Advisors
• Real Options
• Performance Metrics
• Economic Value Added
• Total Societal Impact
• Balanced Scorecard
• Bibliography
• Index