Introduction to Corporate Finance

I-15

Index

I-15

serial bonds 515
settle price 801
settlement price 801
settling/settlement 790
daily settlement 802
settlement date 794
share beta 225–6, 401, 408
share issue privatisation (SIP) 451–2
share option plans 702
share options 24
share prices 42, 157, 162–3, 166,
319–22, 457–8, 543
high prices and mergers 720
share purchase warrants 505–6, 513
share returns, predictability 250–1
share splits 540
share transfers 773
shareholder value 568, 631 , 635 , 726
shareholder value added (SVA) see
economic value added
shareholder wealth maximisation 5, 21,
21–3, 318–20, 540, 577
shareholders 18, 42, 159, 406, 453, 775
bearing risk 23
cash flows under capital structure 478
merger gains/losses – returns 737–8
ultimate abandon option 418
voluntary administration and 773
voting rights 138, 159
shareholders’ equity 31, 33
share-option grants 452, 689
shares 11, 138, 158–82, 196, 228, 310,
314, 448, 451, 574
average returns and standard
deviation 207
nominal and real returns on 195–7
outperforming safer investments 213
repurchases 535, 541–4, 548, 551,
555
shelf registration 512
short position 265
short selling 237–9, 238, 796
short-form merger 741 – 2
short-run decisions 21
short-term borrowing 678–80
short-term financial management
633 – 5
short-term financing strategies 582–5
Hershey Foods example 583–5
short-term investment 636 , 676–7
sigma (Σ) [summation notation] 80, 92
signalling models 548–50
simple interest 68–9

sinking funds 142, 510–11

sole proprietorships 16

solvency 633

special dividends 536

special industry number 29

speculation 272, 613–14

speculative bonds 513

speculative motive 677

spin-off 455, 745

split-off 745

spot exchange rate 609, 618–19, 796 ,

797 – 9

spot price 794 – 5

spread 139, 146

staged financing 701 – 2

stakeholders 21–2, 23

stand-alone companies 507–8

standard deviation 189, 204–5, 228–30,

240

standard normal distribution 289–90

start-up capital 690 , 693

stated annual interest rate 96, 98–9

statement of cash flows 35–6

developing and interpreting 40–1

statement of retained earnings 34–5

statistical concepts 228–9

statutory merger 741

Stock Exchange Automated Trading

System (SEATS) 181

stock price 454

stockbrokers 437, 442

strategic plans 571–2

strategy 421

strike price 263

subordinated bonds 509

subordinated debt 502, 775

subordinated unsecured debt 139

subsidiary merger 741

‘substitution effect’ 370

sukuk issuance 503

sunk costs 369

superannuation 9

superannuation funds 201, 521, 694

surplus 582–3, 664 , 676

sustainable growth 572–7

sustainable growth model

developing 574–6

interpreting 577

swap contract 807 – 8

swaps 739 , 807 – 11

sweep accounts 674

syndicated loans 501, 506–8

synergy 727 – 8

systematic (non-diversifiable) risk 401

systematic risk 207–11, 209, 211, 230,

232, 234, 730 , 788

see also beta

T

tailing the hedge 805

takeover defences 744

takeovers 716 , 718

hubris hypothesis 732

top 20 723 – 4

see also acquisition; mergers

tangible assets 483

target cash balances 664

target dividend payout ratio 539, 544

target growth rates 573–4

tax deductibility 408–9, 524

tax hypothesis 739

tax jurisdictions 359

tax liability 791

tax rules 140

tax shields 409

tax write-offs 33

taxable Australian real property

(TARP) 54

taxes 53–4, 359–60, 541, 551, 730 – 1

capital gains taxes 541

investment and 552

teamwork 6

technology 6, 13, 720

tender offer 541, 741

term lending 505, 506

term loan agreements 505

term loans 501, 504–6

term sheets 702

term structure of interest rates 147,

147–51

terminal value see future value 365–7,

374–5

third-party financing 641

‘three factor’ model 410

time lines 70, 81, 85, 126, 321, 327–8,

538, 631

time value 267

time value of money 67–103, 95–103,

161, 313, 317, 329, 357

time-critical transactions 667–8

times interest earned ratio 47, 504

timing option 805 – 6

timing problem (IRR) 334–6

top-down sales forecast 578

total asset turnover 46

total cost (inventory) 637