...concern to the top of the list of valuation issues. The problems with valuing financial service firm stem from two key characteristics. The first is that the cash flows to a financial service firm cannot be easily estimated, since items like capital expenditures, working capital and debt are not clearly defined. The second is that most financial service firms operate under a regulatory framework that governs how they are capitalized, where they invest and how fast they can grow. Changes in the regulatory environment can create large shifts in value. In this paper, we confront both factors. We argue that financial service firms are best valued using equity valuation models, rather than enterprise valuation models, and with actual or potential dividends, rather than free cash flow to equity. The two key numbers that drive value are the cost of equity, which will be a function of the risk that emanates from the firm’s investments, and the return on equity, which is determined both by the company’s business choices as well as regulatory restrictions. We also look at how relative valuation can be adapted, when used to value financial service firms. 2 Banks, insurance companies and other financial service firms pose special challenges for an analyst attempting to value them, for three reasons. The first is the nature of their businesses makes it difficult to define both debt and reinvestment, making the estimation of cash flows much more difficult. The second is...
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...FUNDAMENTALS OF Corporate Finance SECOND EDITION This page intentionally left blank FUNDAMENTALS OF Corporate Finance SECOND EDITION Jonathan Berk STANFORD UNIVERSITY Peter DeMarzo STANFORD UNIVERSITY Jarrad Harford UNIVERSITY OF WASHINGTON Prentice Hall Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo The Prentice Hall Series in Finance Alexander/Sharpe/Bailey Fundamentals of Investments Bear/Moldonado-Bear Free Markets, Finance, Ethics, and Law Berk/DeMarzo Corporate Finance* Berk/DeMarzo Corporate Finance: The Core* Berk/DeMarzo/Harford Fundamentals of Corporate Finance* Bierman/Smidt The Capital Budgeting Decision: Economic Analysis of Investment Projects Bodie/Merton/Cleeton Financial Economics Click/Coval The Theory and Practice of International Financial Management Copeland/Weston/Shastri Financial Theory and Corporate Policy Cox/Rubinstein Options Markets Dietrich Financial Services and Financial Institutions: Value Creation in Theory and Practice Dorfman Introduction to Risk Management and Insurance Dufey/Giddy Cases in International Finance Eakins Finance in .learn Eiteman/Stonehill/Moffett Multinational Business Finance Emery/Finnerty/Stowe Corporate Financial Management Fabozzi Bond Markets: Analysis and Strategies Fabozzi/Modigliani Capital Markets: Institutions...
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...solution SOLUTIONS TO EXERCISES AND CASES For FINANCIAL STATEMENT ANALYSIS AND SECURITY VALUATION Stephen H. Penman Fifth Edition CHAPTER ONE Introduction to Investing and Valuation Concept Questions C1.1. Fundamental risk arises from the inherent risk in the business – from sales revenue falling or expenses rising unexpectedly, for example. Price risk is the risk of prices deviating from fundamental value. Prices are subject to fundamental risk, but can move away from fundamental value, irrespective of outcomes in the fundamentals. When an investor buys a stock, she takes on fundamental risk – the stock price could drop because the firm’s operations don’t meet expectations – but she also runs the (price) risk of buying a stock that is overpriced or selling a stock that is underpriced. Chapter 19 elaborates and Figure 19.5 (in Chapter 19) gives a display. C1.2. A beta technology measures the risk of an investment and the required return that the risk requires. The capital asset pricing model (CAPM) is a beta technology; is measures risk (beta) and the required return for the beta. An alpha technology involves techniques that identify mispriced stocks than can earn a return in excess of the required return (an alpha return). See Box 1.1. The appendix to Chapter 3 elaborates on beta technologies. C1.3. This statement is based on a statistical average from the historical data: The return on stocks...
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...S TA N L E Y P U B L I C AT I O N In This Issue: Valuation, Capital Budgeting, and Disclosure Enterprise Valuation Roundtable Presented by Ernst & Young 8 Panelists: Richard Ruback, Harvard Business School; Trevor Harris, Morgan Stanley; Aileen Stockburger, Johnson & Johnson; Dino Mauricio, General Electric; Christian Roch, BNP Paribas; Ken Meyers, Siemens Corporation; and Charles Kantor, Lehman Brothers. Moderated by Jeff Greene, Ernst & Young. The Case for Real Options Made Simple 39 Raul Guerrero, Asymmetric Strategy Valuing the Debt Tax Shield 50 Ian Cooper, London Business School, and Kjell G. Nyborg, Norwegian School of Economics and Business Administration Measuring Free Cash Flows for Equity Valuation: Pitfalls and Possible Solutions 60 Juliet Estridge, Morgan Stanley, and Barbara Lougee, University of San Diego Discount Rates in Emerging Markets: Four Models and an Application 72 Javier Estrada, IESE Business School Rail Companies: Prospects for Privatization and Consolidation 78 James Runde, Morgan Stanley A Real Option in a Jet Engine Maintenance Contract 88 Richard L. Shockley, Jr., University of Indiana A Practical Method for Valuing Real Options: The Boeing Approach 95 Scott Mathews, The Boeing Company, Vinay Datar, Seattle University, and Blake Johnson, Stanford University Accounting for Employee Stock Options and Other Contingent Equity Claims: Taking a Shareholder’s View 105 James...
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...CORPORATE FINANCE T H IRD E DIT ION JONATHAN BERK STANFORD UNIVERSITY PETER D E MARZO STANFORD UNIVERSITY Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo To Rebecca, Natasha, and Hannah, for the love and for being there —J. B. To Kaui, Pono, Koa, and Kai, for all the love and laughter —P. D. Editor in Chief: Donna Battista Acquisitions Editor: Katie Rowland Executive Development Editor: Rebecca Ferris-Caruso Editorial Project Manager: Emily Biberger Managing Editor: Jeff Holcomb Senior Production Project Manager: Nancy Freihofer Senior Manufacturing Buyer: Carol Melville Cover Designer: Jonathan Boylan Cover Photo: Nikreates/Alamy Media Director: Susan Schoenberg Content Lead, MyFinanceLab: Miguel Leonarte Executive Media Producer: Melissa Honig Project Management and Text Design: Gillian Hall, The Aardvark Group Composition and Artwork: Laserwords Printer/Binder: R.R. Donnelley/Jefferson City Cover Printer: Lehigh Phoenix Text Font: Adobe Garamond Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text and on this copyright page. Credits: Cover: Sculpture in photo: Detail of Flamingo (1973), Alexander Calder. Installed in Federal Plaza, Chicago. Sheet metal and paint, 1615.4 x 1828.8 x 731...
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...CORPORATE FINANCE T H IRD E DIT ION JONATHAN BERK STANFORD UNIVERSITY PETER D E MARZO STANFORD UNIVERSITY Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo To Rebecca, Natasha, and Hannah, for the love and for being there —J. B. To Kaui, Pono, Koa, and Kai, for all the love and laughter —P. D. Editor in Chief: Donna Battista Acquisitions Editor: Katie Rowland Executive Development Editor: Rebecca Ferris-Caruso Editorial Project Manager: Emily Biberger Managing Editor: Jeff Holcomb Senior Production Project Manager: Nancy Freihofer Senior Manufacturing Buyer: Carol Melville Cover Designer: Jonathan Boylan Cover Photo: Nikreates/Alamy Media Director: Susan Schoenberg Content Lead, MyFinanceLab: Miguel Leonarte Executive Media Producer: Melissa Honig Project Management and Text Design: Gillian Hall, The Aardvark Group Composition and Artwork: Laserwords Printer/Binder: R.R. Donnelley/Jefferson City Cover Printer: Lehigh Phoenix Text Font: Adobe Garamond Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text and on this copyright page. Credits: Cover: Sculpture in photo: Detail of Flamingo (1973), Alexander Calder. Installed in Federal Plaza, Chicago. Sheet metal and paint, 1615.4 x 1828.8 x 731...
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...CORPORATE FINANCE DEMYSTIFIED TROY A. ADAIR, Jr. McGraw-Hill New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto Copyright © 2006 by The McGraw-Hill Companies. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-148678-X The material in this eBook also appears in the print version of this title: 0-07-145910-3. All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at george_hoare@mcgraw-hill.com or (212) 904-4069. TERMS OF USE This is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted...
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...BU Basic M.B.A. International Master of Business Administration |Index | Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Business Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Entrepreneurship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 Strategic Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...
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...STANDARD EDITION Ross Westerfield Jordan FUNDAMENTALS OF CORPORATE FINANCE tenth edition StuDEntS... Want to get better grades? (Who doesn’t?) Prefer to do your homework online? (After all, you are online anyway…) Need a better way to study before the big test? (A little peace of mind is a good thing…) With McGraw-Hill's Connect Plus Finance, ® StudentS get: • Easy online access to homework, tests, and quizzes assigned by your instructor. • Immediate feedback on how you’re doing. (No more wishing you could call your instructor at 1 a.m.) • Quick access to lectures, practice materials, eBook, and more. (All the material you need to be successful is right at your fingertips.) • A Self-Quiz and Study tool that assesses your knowledge and recommends specific readings, supplemental study materials, and additional practice work.* *Available with select McGraw-Hill titles. Less managing. More teaching. Greater learning. InStRuctoRS... Would you like your students to show up for class more prepared? (Let’s face it, class is much more fun if everyone is engaged and prepared…) Want an easy way to assign homework online and track student progress? (Less time grading means more time teaching…) Want an instant view of student or class performance? (No more wondering if students understand…) Need to collect data and generate reports required for administration or accreditation? (Say goodbye to manually tracking student learning outcomes…) Want to record...
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...Syllabus Certified General Accountants Association of Canada 100 – 4200 North Fraser Way Burnaby, British Columbia Canada V5J 5K7 www.cga-canada.org © CGA-Canada, 2013 All rights reserved. These materials or parts thereof may not be reproduced or used in any manner without the prior written permission of the Certified General Accountants Association of Canada. Printed in Canada ISBN for an individual volume: 978-1-55219-599-4 About CGA-CANADA _________________________________________ CGA-Canada today The CGA designation focuses on integrity, ethics, and the highest education requirements. Recognized as the country’s accounting business leaders, CGAs provide strategic counsel, financial leadership, and overall direction to all sectors of the Canadian economy. The Certified General Accountants Association of Canada — CGA-Canada — sets standards, develops education programs, publishes professional materials, advocates on public policy issues, and represents CGAs nationally and internationally. The Association represents 75,000 CGAs and students in Canada, Bermuda, the Caribbean, Hong Kong, and China. Mission CGA-Canada advances the interests of its members and the public through national and international representation and the establishment of professional standards, practices, and services. A proud history CGA-Canada was founded in Montréal in 1908 under the leadership of John Leslie, vicepresident of the Canadian Pacific Railway. From the beginning, its objective...
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...receipt AFN Additional funds needed AMT Alternative minimum tax APR b Annual percentage rate Beta coefficient, a measure of an asset’s riskiness bL Levered beta bU Unlevered beta BEP BVPS CAPEX CAPM CCC Basic earning power Book value per share Capital expenditures Capital Asset Pricing Model Cash conversion cycle CF Cash flow; CFt is the cash flow in Period t CR Conversion ratio CV Coefficient of variation Dp Dividend of preferred stock Dt Dividend in Period t DCF Discounted cash flow D/E Debt-to-equity ratio DEP Depreciation D1/P0 DPS DRIP Expected dividend yield Dividends per share Dividend reinvestment plan DRP Default risk premium DSO Days sales outstanding e Approximately equal to 2.7183 EAA Equivalent annual annuity EAR Effective annual rate, EFF% EBIT EBITDA EPS EVA F Earnings before interest and taxes; operating income Earnings before interest, taxes, depreciation, and amortization Earnings per share Economic value added (1) Fixed operating costs (2) Flotation cost FCF Free cash flow FVN Future value for Year N FVAN g GAAP HVN I IFRS IPER I/YR INT IP IPO IRR LIBOR ln(P/X) Future value of an annuity for N years Growth rate in earnings, dividends, and stock prices U.S. Generally Accepted Accounting Standards Firm’s horizon value at t ¼ N Interest rate; also referred to as r International Financial...
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...CURRICULUM OF BUSINESS ADMINISTRATION FOR BBA, BBS, MBA & MS HIG HER EDUC ATIO N CO MM ISSION (2012) HIGHER EDUCATION COMMISSION ISLAMABAD 1 CURRICULUM DIVISION, HEC Prof. Dr. Syed Sohail H. Naqvi Mr. Muhammad Javed Khan Malik Arshad Mahmood Dr. M. Tahir Ali Shah Mr. Farrukh Raza Mr. Abdul Fatah Bhatti Executive Director Adviser (Academics) Director (Curri) Deputy Director (Curri) Asstt. Director (Curri) Asstt. Director (Curri) Composed by: Mr. Zulfiqar Ali, HEC, Islamabad 2 CONTENTS 1. Introduction……………………………………...........6 2. BBA Programme....................................................11 a. Structure of BBA Programme..……………....12 b. Layout for BBA Programme..........................13 c. Semester-wise Breakup for BBA…...............14 3. Bachelor of Business Studies (BBS)......................15 4. MBA Programme....................................................16 a. Structure of MBA Programme........................17 b. Semester-wise Breakup for MBA...................19 5. MS in Management Sciences................................20 a. Structure of MS Programme...........................20 b. Eligibility for Non-business Degree Holders...21 6. Roadmap for Business Education…………............24 7. BBA Course outlines...............................................25 a. Compulsory Courses for BBA...…….…..........25 b. Foundation Core Courses...........…....…....... 41 c. Major Core Courses........................................59 d. Major...
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...Second Year - Third Semester 3.0.1 International Business - University Assessment 100 Marks Course Content 1. Overview of the International Business Process 2. PEST factors affecting International Business 3. Government influence on trade 4. International Trade Theories 5. FDI 6. Country Evaluation and Selection 7. Collaborative Strategies 8. International Marketing 9. International Trade Agreements 10. International Trade Organizations 11. Forex 12. International HR Strategies 13. International Diplomacy Reference Text 1. International Business – Daniels and Radebough 2. International Business – Sundaram and Black 3. International Business – Roebuck and Simon 4. International Business – Charles Hill 5. International Business – Subba Rao 3.0.2 Strategic management 100 Marks Course Content 1. Strategic Management Process: Vision, Mission, Goal, Philosophy, Policies of an Organization. 2. Strategy, Strategy as planned action, Its importance, Process and advantages of planning Strategic v/s Operational Planning. 3. Decision making and problem solving, Categories of problems, Problem solving skill, Group decision making, Phases indecision making. 4. Communication, Commitment and performance, Role of the leader, Manager v/s Leader, Leadership styles. 5. Conventional Strategic Management v/s Unconventional Strategic Management, The differences, Changed Circumstance 6. Growth Accelerators: Business Web, Market Power, Learning based. 7. Management Control, Elements,...
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...manner so that the reader may evaluate the firm’s investment, financing, and dividend deci sions in keeping with an objective of maximizing shareholder wealth; second, to become familiar with the application of analytical techniques to a number o f areas o f financial decision-making; and third, to expose the reader to the institutional material necessary to give him a feel for the environment in which financial decisions are made. In revising, I have attempted to reflect changes that have occurred in financial theory and practice since the first edition as well as to sharpen and update existing material so that it is better structured and more easily comprehended. There is an increased emphasis upon valuation and upon linking various financial decisions with valuation. In this regard,...
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...CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY Supply chain encompasses several business entities including suppliers, manufacturers, wholesalers, distributors, retailers and customers concerned with ensuring the flow of raw materials, component parts or finished goods from the source to the final destination, organizations can no longer detached from these business entities (Adebayo, 2012). As stated by (Gunasekaran et al., 2003), companies cannot run away from being part of SCM in either operational or strategic level of implementation. In the traditional way, companies just buy the raw material, process it to become final product and distribute it to the customers. At the strategic level of implementation, the focus is more toward fulfilling customer’s requirement and satisfaction. Supply chain management can help a company achieve the true return on investment of customer relationship management (CRM) systems, making it easier to see how well-managed and efficient supply chain operations have a significant bearing on the organization’s overall financial performance. One important benefit is that supply chain management reduces the time required for a new product or service to progress from the initial concept to its final delivery to the market. Indeed, a key objective of supply chain management is to bring new ideas to market faster, whether they are innovations from in-house or ideas gleaned from elsewhere that an enterprise needs to transform into deliverable...
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