The Basics of Finance: An Introduction to Financial Markets, Business Finance and Portfolio Management

Chapter 1 What is Finance?
Capital Markets & Capital Market Theory
Financial Management
Investment management
Organization of this book
The Bottom Line
Questions
Part One: The Financial System
Chapter 2 Financial Instruments, Markets and Intermediaries
The financial system
The Role of Financial Markets
The role of financial intermediaries
Types of financial markets
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Questions
Chapter 3 The Financial System’s Cast of Characters
Domestic nonfinancial sectors
Nonfinancial businesses
Domestic financial sectors
The foreign sector
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Questions
Part Two: Financial Management
Chapter 4 Financial Statements
Accounting principles: What are they?
The basic financial statements
How are the statements related?
Why bother about the footnotes?
Accounting flexibility
U.S. accounting v. outside of the U.S.
The Bottom Line
Solutions to Try it! Problems
Questions
Chapter 5 Business Finance
Forms of business enterprise
The objective of financial management
The Bottom Line
Solutions to Try it! Problems
Questions
Chapter 6 Financial Strategy and Financial Planning
Strategy and value
The budgeting process
Budgeting
Performance evaluation
Strategy and value creation
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Questions
Chapter 7 Dividend and Dividend Policies
Dividends
Stock distributions
Dividend policy
Stock repurchases
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Solutions to Try it! Problems
Questions
Chapter 8 The Corporate Financing Decision
Debt v. equity
Financial leverage and risk
Financial distress
The cost of capital
Optimal capital structure: Theory and practice
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Solutions to Try It! Problems
Questions
Chapter 9 Investment Management
Setting investment objectives
Establishing an investment policy
Constructing and monitoring a portfolio
Measuring and evaluating performance
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Solutions to Try it! Problems
Questions
Part Three: Valuation and Analysis Tools
Chapter 10 Time Value of Money
Why the time value of money?
Calculating the future value
Calculating a present value
Determining the unknown interest rate
The time value of a series of cash flows
Annuities
Loan amortization
Interest rates and yields
The Bottom Line
Solutions to Try it! Problems
Questions
Chapter 11 Financial Ratio Analysis
Classifying financial ratios
Liquidity
Profitability ratios
Activity ratios
Financial leverage
Return on investment
The Du Pont system
Common-size analysis
Using financial ratio analysis
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Solutions to Try it! Problems
Questions
Chapter 12 Cash Flow Analysis
Difficulties with measuring Cash Flow
Free cash flow
Usefulness of cash flows analysis
Ratio analysis
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Solutions to Try it! Problems
Questions
Chapter 13 Capital Budgeting
Investment decisions and owners' wealth
The capital budgeting process
Determining cash flows from investments
Capital budgeting techniques
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Solutions to Try it! Problems
Questions
Part Four: Investments
Chapter 14 The World of Derivatives
Futures and forward contracts
Options
Swaps
The Bottom Line
Appendix: Black-Scholes option pricing model
Solutions to Try it! Problems
Questions
Chapter 15 Financial Risk Management
The definition of risk
Enterprise risk management
Managing risks
The Bottom Line
Questions
Chapter 16 The Theory of Portfolio Selection
Some basic concepts
Estimating a portfolio's expected return
Measuring portfolio risk
Portfolio diversification
Choosing a portfolio of risky assets
Behavioral finance and portfolio theory
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Solutions to Try it! Problems
Questions
Chapter 17 Asset Pricing Theory: The Capital Asset Pricing Model
Characteristics of an asset pricing model
Overview of the capital asset pricing model
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Solutions to Try it! Problems
Questions
Chapter 18 The Structure of Interest Rates
The base interest rate
The term structure of interest rates
Term structure of interest rates theories
Swap rate yield curve
The Bottom Line
Solutions to Try it! Problems
Questions
Chapter 19 Valuing Common Stock
Discounted cash flow models
Relative valuation methods
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Solutions to Try it! Problems
Questions
Chapter 20 Valuing Bonds
Valuing a bond
Conventional yield measures
Valuing bonds that have embedded options
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Solutions to Try it! Problems
Questions
Appendix: Solutions to End of Chapter Questions and Problems