Stock markets and corporate finance:
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| Main Author: | |
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| Format: | Book |
| Language: | English |
| Published: |
New Jersey
World Scientific
[2018]
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| Subjects: | |
| Online Access: | Inhaltsverzeichnis |
| Physical Description: | xxxi, 493 Seiten Illustrationen |
| ISBN: | 9781786343253 9781786343260 |
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MARC
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| 100 | 1 | |a Dempsey, Michael |d 1951- |e Verfasser |0 (DE-588)170891356 |4 aut | |
| 245 | 1 | 0 | |a Stock markets and corporate finance |c Michael Dempsey (RMIT University, Melbourne, Australia) |
| 264 | 1 | |a New Jersey |b World Scientific |c [2018] | |
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Record in the Search Index
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| adam_text | Contents
Academic Text by the Author vii
Preface xi
About the Author xiii
Summary of Chapters xxiii
The Important Formulas xxvii
1. Introduction: Stock Markets, Investments
and Corporate Financial Decision Making 1
2. A Short History of Stock Markets 13
2.1 Markets in recent times................................. 15
2.1,1 A performance in three acts .................... 15
2.1.1.1 Supporting cast for the stock markets
and large firms......................... 15
(1) The commercial banks............... 15
(2) The investment banks............... 15
(3) The money markets ................. 17
(4) The Central Banks (the Federal
Reserve in the US).................. 18
(5) The government .................... 19
XV
xvi Contents
(6) The professionally managed funds:
Mutual funds/hedge
funds/insurance funds/pension
funds .............................. 19
(7) The credit rating agencies.......... 20
(8) The Basel Committee on Banking
Supervision......................... 20
(9) The economy......................... 21
2.2 Prologue: The early background economy.................. 21
2.2.1 Act I: The 1980s Bull Market and Black Monday 23
2.2.2 Act II: The dot.com bubble and Black Friday . . 37
2.2.3 Act III: Securitization and the global financial
crisis .......................................... 43
3. The Time Value of Money and Financial Planning
3.1 Introduction.........................................
3.2 The time-value of money: Discrete returns, compounding
and discounting.......................................
3.2.1 Percentages as fractions......................
3.2.2 Single-period growth..........................
3.2.3 Multiple period growth........................
3.2.4 Discounting...................................
3.3 Perpetuities and annuities...........................
3.3.1 A growing perpetuity..........................
3.3.2 A perpetuity..................................
3.3.3 Present value of an annuity...................
3.3.4 Future value of an annuity....................
3.4 Quarterly (and semi-annual, etc.) payments...........
3.5 Life policies........................................
3.6 Planning for retirement..............................
3.7 Real rates of return.................................
3.8 Planning for retirement allowing for money purchasing
power.................................................
3.9 Repayment of a mortgage..............................
3.10 Time for reflection: What have we learned?...........
6-
69
69
70
n-1
i i-
72
73
73
74
75
76
78
80
82
84
87
89
90
4. Market Debt, Interest Rates and Bond Valuation 95
4.1 Introduction ........................................ 96
Contents xvii
4.2 Short-term financing: The money markets................... 97
4.2.1 Finance companies................................. 100
4.3 The role of a central bank in determining interest
rates.................................................... 101
4.4 Long-term debt........................................... 102
4.5 Valuation of bonds....................................... 104
4.6 Required discount rate and risk of default............ 108
4.7 Interrogating bonds...................................... 110
(i) The expectations hypothesis (anticipation of interest
rates)............................................... 110
(ii) The liquidity hypothesis (interest rate risk)....... 113
(iii) The segmentation hypothesis (segmented
markets)............................................. 115
4.8 Time for reflection: What have we learned?............... 116
5. The Valuation of Equity Shares 125
5.1 Introduction ............................................ 126
5.2 The provision of equity finance.......................... 127
5.3 Share price response to new equity issues................ 128
5.4 The discounting of dividends model of share
valuation................................................ 134
5.5 A firm with a fixed growth............................... 137
5.6 A firm with zero (real) growth........................... 139
5.7 Motivation for dividends................................. 141
5.8 Self-sustaining growth................................... 143
5.9 The P/E ratio............................................ 147
5.10 Share price determination in practice.................... 153
5.10.1 Fundamentals as a basis for share valuation . . . 153
5.10.2 The psychology of the market ..................... 154
5.11 Time for reflection: What have we learned?............ 155 6
6. Shareholders’ Required Rate of Return
(The Cost of Equity Capital) 165
6.1 Introduction............................................. 167
6.2 The CAPM as a determination of the discount
rate..................................................... 167
6.3 Empirical issues with the CAPM........................... 173
6.4 Empirical tests of the CAPM.............................. 176
xviii Contents
6.5 Assessment of the CAPM................................... 179
6.6 The Fama and French three-factor (FF-3F)
model.................................................... 183
6.7 Time for reflection: What have we learned?............... 187
7. Accounting Statements and Ratio Analysis 193
7.1 Introduction............................................. 194
7.2 The statements.......................................... 19(5
7.2.1 The income statement (Table 7.1).................. 197
7.2.2 The balance sheet (Table 7.2) 199
7.2.3 The self-locking nature of the Income Statement
and Balance Sheet................................. 202
7.2.4 The statement of cash flows (Table 7.3)........ 203
7.3 Ratio analysis (Table 7.4)............................... 207
7.3.1 The main ratios................................... 209
7.3.2 Du pont ratio analysis............................ 217
7.4 Common size analysis..................................... 218
7.5 Time for reflection: What have we learned?............... 220
8. Financial Leverage 225
8.1 Introduction............................................. 226
8.2 Leverage of the firm’s capital structure................. 227
8.3 Debt and the economy..................................... 230
8.4 Derivation of Modigliani and Miller’s Propositions
I and II................................................. 231
8.5 The Modigliani and Miller propositions
and the CAPM............................................. 235
8.6 Consistency of the discounting of dividends model with
leverage and the CAPM and MM propositions................ 238
8.7 The MM propositions challenged........................... 243
8.8 An optimal debt leverage ................................ 244
8.9 Time for reflection: What have we learned?............... 246
9. Valuation of Cash Flows 257
9.1 Introduction ............................................ 258
9.2 Methods of discounting: The CFE (ks) and FCF
(WACC) approaches........................................ 261
9.2.1 The cash flow to equity (CFE) approach .... 261
Contents xix
9.2.2 The operating free cash flow (FCF) discounted
by the WACC approach.............................. 264
9.3 Additional examples demonstrating consistency of the
discounting methods....................................... 267
9.4 The WACC as industry-favored approach..................... 272
9.5 Key elements of the cash flow............................. 273
9.6 Time for reflection: What have we learned?................ 277
10. Currency Exchange Rates 287
10.1 Introduction ............................................. 289
10.2 The forces driving an exchange rate....................... 290
10.3 Manipulating exchange rates............................... 295
10.3.1 Currency conversion and the principle
of dimensional consistency........................ 295
10.3.2 Direct and indirect quotes for currencies .... 296
10.4 A model of exchange rates in response to interest rates
and inflation: The parity conditions...................... 297
10.4.1 Purchasing power parity (PPP), relative
purchasing power parity (RPPP).................... 297
10.4.1.1 Relative purchasing power parity
(RPPP) and percentage changes in
currencies............................... 298
10.4.1.2 Relative purchasing power parity
(RPPP) and “follow through”.............. 300
10.4.1.3 A reality check on purchasing power
parity (PPP)............................. 303
10.4.2 Interest rate parity (IRP)........................ 303
10.4.2.1 A reality check on interest rate parity
(IRP) ................................... 305
10.4.3 Forward rate parity (FRP)......................... 306
10.4.3.1 The currency premium
(or discount) ........................... 309
10.5 Time for reflection: What have we learned?......... 309 11 * *
11. Derivatives Instruments: Hedging (Speculating on)
Currency Risk 317
11.1 Introduction ............................................. 318
11.2 Forward and future contracts.............................. 319
xx Contents
11.3 Options................................................. 323
11.4 Options and foreign currencies.......................... 325
11.4.1 Buyer of a call.................................. 326
11.4.2 Seller (writer) of a call ....................... 322
11.4.3 Buyer of a put................................... 331
11.4.4 Seller (writer) of a put ........................ 332
11.5 Price discovery: Intrinsic and time value............... 333
11.6 Speculating on foreign exchange............................ 333
11.7 Hedging corporate foreign exchange exposure................ 336
11.8 Time for reflection: What have we learned?................. 342
12. Investment Decision-Making: Theory and Practice 353
12.1 Introduction .............................................. 354
12.2 Investment decision making................................. 355
12.3 Time for reflection: What have we learned?................. 362
13. Equity Value and Personal Taxes 365
13.1 Introduction .............................................. 366
13.2 Share returns and personal taxes........................... 366
13.3 Personal taxes and an imputation tax system................ 371
13.4 Time for reflection: What have we learned?........... 373 14 15
14. Financial Leverage (Revisited) 377
14.1 Introduction .............................................. 379
14.2 The tax deductibility of the firm’s interest
payments.................................................... 379
14.3 Alternative to Modigliani and Miller’s derivation of the
corporate tax shield (PVTS) ................................ 386
14.4 The corporate tax shield challenged........................ 394
14.5 Adjustment to Equations (14.8)-(14.9) and
(14.11H14.12).............................................. 396
14.6 Time for reflection: What have we learned?............. 399
15. Valuation of the Firm’s Cash Flows (Revisited) 409
15.1 Introduction .............................................. 410
15.2 Alternative methods of discounting......................... 410
Contents xxi
15.2.1 The adjusted present value (APV) method . . . 411
15.2.2 The capital cash flow (CCF) method................ 412
15.3 Algebraic consistency between the adjusted present value
(APV) and capital cash flow (CCF) methods
of discounting and the CFE and WACC methods
(of Chapter 9) 413
15.3.1 The APV method..................................... 414
15.3.2 The CCF method..................................... 416
15.4 Recalculation of illustrative examples 9.3-9.5 from
Chapter 9 with the APV and CCF ( av) methods . . . 424
15.5 Time for reflection: What have we learned?................. 431
16. Ethical Behavior 437
16.1 Introduction .............................................. 438
16.2 The meaning of ethical behavior............................ 439
16.3 Time for reflection: What have we learned?................. 442
SOLUTIONS to Multiple Choice Questions and Illustrative
Examples 443
Index 487
|
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| isbn | 9781786343253 9781786343260 |
| language | English |
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| spelling | Dempsey, Michael 1951- Verfasser (DE-588)170891356 aut Stock markets and corporate finance Michael Dempsey (RMIT University, Melbourne, Australia) New Jersey World Scientific [2018] xxxi, 493 Seiten Illustrationen txt rdacontent n rdamedia nc rdacarrier Management (DE-588)4037278-9 gnd rswk-swf Corporate Finance (DE-588)4269795-5 gnd rswk-swf Börse (DE-588)4007502-3 gnd rswk-swf (DE-588)4123623-3 Lehrbuch gnd-content Börse (DE-588)4007502-3 s Corporate Finance (DE-588)4269795-5 s Management (DE-588)4037278-9 s b DE-604 Digitalisierung UB Regensburg - ADAM Catalogue Enrichment application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=029884334&sequence=000001&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Dempsey, Michael 1951- Stock markets and corporate finance Management (DE-588)4037278-9 gnd Corporate Finance (DE-588)4269795-5 gnd Börse (DE-588)4007502-3 gnd |
| subject_GND | (DE-588)4037278-9 (DE-588)4269795-5 (DE-588)4007502-3 (DE-588)4123623-3 |
| title | Stock markets and corporate finance |
| title_auth | Stock markets and corporate finance |
| title_exact_search | Stock markets and corporate finance |
| title_full | Stock markets and corporate finance Michael Dempsey (RMIT University, Melbourne, Australia) |
| title_fullStr | Stock markets and corporate finance Michael Dempsey (RMIT University, Melbourne, Australia) |
| title_full_unstemmed | Stock markets and corporate finance Michael Dempsey (RMIT University, Melbourne, Australia) |
| title_short | Stock markets and corporate finance |
| title_sort | stock markets and corporate finance |
| topic | Management (DE-588)4037278-9 gnd Corporate Finance (DE-588)4269795-5 gnd Börse (DE-588)4007502-3 gnd |
| topic_facet | Management Corporate Finance Börse Lehrbuch |
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