Introduction to Corporate Finance

I-16

Index

I-16

total return 194

components 192–3

total variable cost of annual sales (TVC)

645

trade credit 629 , 632 , 640 – 1 , 791

trademarks 32

trade-off model of corporate leverage

486–7

trading 179

trading costs 551–2

trading stocks 455

transactions costs 551–2, 790

transactions exposure 789

transactions motive 676

transactions requirement 664

transparency 453

Treasury bills 195–7, 227

Treasury bonds 137, 805

exchange-traded 136

Treasury Notes (short term) 137, 227

proxy for risk-free asset 234–5

treasury stock 33

trend lines 232

triangular arbitrage 610–11

trustees 511, 772

turnover of accounts receivable (TOAR)

645

2/10 net 30 673

U

uncertainty 410, 590–1

underinvestment 483–4

underlying asset 263

underpricing 448, 450

undervaluation 720 , 729 – 30

underwriting 179, 436, 437, 443, 447,

457, 511

underwriting spread 179, 440, 442

universities, venture capital and 695 – 6

unseasoned equity offerings see initial

public offerings

unsecured creditors 767 , 770–1, 773 ,

775 , 777

unsecured debt 139–40

unsecured loans 505

unsystematic risk 207–11, 209, 211,

213, 215, 230, 232, 788

up-front costs 371

USA

blue-chip US corporations 514

bond-issuance patterns 512

cross-border trading 721 – 3

dollar 603–4, 606–8

FI role in corporate finance 435–6

financial sector compositions 437

foreign bond markets 514

IPO – market patterns and

performance 447–9

pension and endowment funds 696

petrol prices and depreciation 363

pivotal laws regarding markets 435–6

S&P 500 Index 225, 231

Sarbanes–Oxley Act of 2002 751

small business investment companies

(SBICs) 692

start-up funding sources 690

stock dividends 539–40

Treasury STRIPS 140

2-day value surge 225–6

US bank prime rate 501

VC-funded companies 695

venture capital 690 – 1 , 698 , 708

V

valuation 121–3, 319, 704

basic equation (annual interest

assumption) 125–8

relative valuation 729 – 30

valuation methods for mergers 735–7

value adding 491, 729 , 734 – 40

variable growth 165–7

variable-rate bonds 138

variance 203–4, 228–9

vehicle companies see stand-alone

companies

venture capital 688–711, 690–8

fund types 692–3

international markets for 708 – 11

venture capital investment

by company development stage

696 – 7

comparative performance 705

divestments 706

economic effect 697 – 8

industrial and geographic distribution

695 – 6

investment patterns 693 – 4

investors 169

pricing 704

profitability 705

R&D expenditures 709 – 10

returns 703

venture capital limited partnerships 692

venture capitalists 11, 452, 700

convertible securities use 702 – 4

exit strategies 706 – 7

investments structure 700–3

vertical mergers 718

volatility 8, 13, 132, 189, 205, 230,

281–2, 446–7, 470, 504, 586, 789 ,

790 , 791

risk and 202–6

voluntary administration 764–5

affected parties 772–4

process 766

voluntary administrators 765

appointment, effect of 767

fees, approval of 771–2

report and statement (deed) 769

roles 767–9

voting rights 138, 159, 702

‘vouchering’ 671

W

warranties 791

warrants 261–2, 293–6, 505–6

wealth maximisation 5, 21–3, 572–3

weighted average cost of capital

(WACC) 171, 249, 405–9, 475–6,

525

formula and modification 405–7

proviso 408

Western Europe, venture capital 698

wholesale lockboxes 669

winner’s curse 738

wire transfers 669 , 670

working capital 525

Y

Yankee bonds 439

year 0, 1, 2 cash flows 373

yield curves 147–8, 503

interest rates forecasting 148–50

yield spread 144–5

yield to maturity (YTM) 127, 132–3,

141, 144, 160, 227, 807

Z

zero growth model 163–4

zero-balance accounts (ZBAs) 674

zero-coupon bonds 140–1

zero-sum game 524, 802 – 3

Z-score 777–8