Introduction to Corporate Finance

I-7

Index

I-7

corporate governance 12–13, 751 – 3 ,
760
corporate insiders, laws affecting 751
corporate loans 504–8
corporate tax 53–4, 359–60, 480
M & M model with 477–9, 480–1
corporate venture capital funds 692
corporations 18
corporate goals 22
Corporations Act 2001 (Cth) 12, 18,
443, 763 , 769 , 771
correlation coefficient 240
cost of capital 324, 406–7, 573, 619–20
risk-adjusted discount rate and 410
cost of debt 476
cost of equity 400–5, 408, 476
increased leverage proposition 474–5
cost of funds 573
cost of goods sold 33
cost of marginal investment in accounts
receivable 645
cost structure 402–3
cost trade-offs 67, 504, 572, 574,
633 – 5 , 638
risk–return trade-off 21, 190,
192–215
cost–benefit analysis 647 – 8 , 668
costs 19, 23–5, 32, 122, 369–70,
378–80, 484–6, 633 , 790
benefits exceeding 5
bond flotation or issuance costs 519
cost synergies 728
of insolvency and financial distress
482–4
of money 504
counterparty risk 266
coupon payments 138
coupon rate 124, 144
coupon yield 124, 192
coupons 124
cover assets 509
coverage ratio 46
covered bonds 509
credit 641 – 2 , 642 , 678
credit availability 465
credit cards 99, 590, 672 , 675 , 693
credit checks 641 – 2
credit default swaps (CDSs) 499
credit information 641
credit monitoring 648 – 51
credit period 640
credit rating 731
credit scoring 642 – 3

credit spread 139

credit standards 641 – 6

credit terms 640 – 1 , 646 – 7 , 648 , 673

creditor days 590

creditors 42, 764

insolvency priority 774

creditors’ committees 772

creditors’ meetings 767–9

to vary or end deeds 770–1

creditworthiness 514, 642 – 3 , 680 ,

802

cross exchange rate 610

cross-border trading 451, 721 – 3

cross-default covenant 502

cross-hedging 805

crowdfunding 690

cum dividend 537

cumulative dividends 159

currency board arrangement 603

currency distribution 604–5

currency forward contracts 796 – 9

currency forward rates 798

currency movements 614–19

currency options, hedging with 806 – 7

currency pegs 603–4, 614

currency swap 514

currency swaps 810 – 11

currency values 614

hedgers’ and speculators’ influence

613–14

current assets 583–4

current ratio 43

current yield 124

cyclical shares 228–9

D

date payable 537

days’ sales outstanding (DSO) see

average collection period

dealers 614

debentures 140, 508–9

debt 11, 33, 46, 139–40, 433–4, 476,

503–4

maturation 500

private placement of see term loans

using to overcome agency costs 485

debt capital 14

debt capital market (DCM) 434

debt financing 763

debt instruments 510

debt policy 475–7, 489

debt ratio 504

debt ratios 46–7

debt securities 138

equity securities, distinction 159

debt–equity ratios 466

debt-for-equity swap 739

debtor days 590

debt-to-equity ratio 47, 456

decentralised payments system 672

decision trees 414–15

deed administrators 770–1

deed of company arrangement 764 ,

767 , 769–70, 769–71, 773

default risk 135, 142, 234

deferred taxes 33

deficit 582–3, 664 , 676

deliverable instruments 805 – 6

demand registration rights 702

deposits, future value and 99–100

depreciation 32, 40, 355, 360, 361–3

double-counting depreciation 40–1

depreciation (currency) 174, 608, 611,

614

depreciation tax shield 363

derivative security 263

digital technology 13

diminishing value method 362

DINGO (bonds) 140

direct costs 790

direct insolvency costs 482

direct lease 521

direct quote 608

disbursement fraud 675

disbursements 14, 664 , 671–6, 672

developments 675–6

fraud prevention 675

products and methods 674–5

disclosure 443, 454

discount (bonds) 127

discount rate 171, 404, 408–9

discounted cash flow 735

discounted cash flow (DCF) analysis 191

discounted payback 314–15

discounting 73, 75, 87, 89–90, 314–15,

400–10, 410, 646 – 7

see also present value

diversification 11–12, 207–15, 208,

213, 215, 230, 237, 240–1, 243,

730 – 1 , 792

divestitures 718 , 744 – 5

divestments 706

dividend discount model 172

dividend imputation system 409, 538,

551

dividend irrelevance 545–7