Index I-5
bre44380_idx_I1-I24 5 09/30/15 01:56 PM
differences in, 880–883
financial manager role, 7
financial markets and institutions in,
867–871
payout policy and, 427–429
value maximization in, 7–13, 17–18
Corporate raiders, 11
Corporate tax rate, 461–462, 465
Corporate venturers, 382
Corporations. See also Corporate bonds;
Corporate governance; Debt financing;
Equity financing; Shareholders; Taxes, on
corporations
closely-held, 5–6, 847
defined, 5
financial manager in, 7
public. See Public companies
restructuring by. See Restructuring
separation of ownership and control, 6,
12–13, 830–831, 871–880
Corus Steel, 814, 835
Corwin, S. A., 399n
Cost of capital. See Opportunity cost of capital
Cost of debt, in company cost of capital,
224–225
Cost of equity capital, 225–229, 512–514. See
also Company cost of capital; Opportunity
cost of capital
defined, 82
estimating, 85–90
leverage and, 443–445
Counterparty risk, 679
Coupon, bond
annual, 47–48
defined, 47, 47n
semiannual, 48–50, 619
Coval, J. D., 623n
Covariance
bet a a nd, 182 –183
in calculating portfolio risk, 177–178,
182 –183
def i ne d, 177, 177n
Covidien, 80, 813
Cowgill, B., 347n
Coy, P., 585n
Crash of 1929, 11, 204n
Credit analysis, 792
Credit decision, 792–795
Credit default swaps, 600–602, 690
Credit events, 601
Credit insurance, 795n
Credit management, 790–796
collection policy in, 795–796
credit analysis in, 792
credit decision in, 792–795
promise to pay and, 791
terms of sale in, 791
CreditMetrics, 613, 613n
Credit risk, 597–615
bank loan, 638
bond ratings, 66, 66n, 67–68, 375,
6 02 , 6 08 – 610, 613 – 614, 613n, 622,
636, 792
option to default, 601, 602–607, 626
value at risk (VAR), 613–614
yields on corporate debt, 597–602
Credit scoring, 609–610
Credit-sensitive bonds, 635in estimating horizon value, 95
and market efficiency, 338
Consumer credit, 790
Consumer Price Index (CPI), 60
Continental, 294
Contingency planning, 773
Contingent convertible bonds (cocos), 635
Continuous compounding, 36–39
Control rights, 359–360, 381, 871–880
Convenience yield, 283n, 684–685, 685
Convergence trading, 342–343, 343
Converse Inc., 815
Conversion price, 630
Conversion ratio, 630
Convertible bonds, 365, 630–634
bond-warrant package, 633–634
dilution and, 633
dividends and, 633
forcing conversion, 631
reasons for issuing, 631–633
valuation, 630–634
Cooper, I. A., 165n, 643
Cooper, M., 339n
Cootner, P. H., 329n
Copeland, T., 592
Cornell, B., 186, 232n
Cornett, M. M., 397, 397n
Corporate bonds, 2, 597–615. See also
Bond(s); Bond valuation; Debt financing;
Debt policy
bond covenants, 626–627
bond terms, 51, 619–621
call provisions, 624–626
convertible, 365, 630–634
default risk, 64–69
domestic and foreign, 629
indenture, 621
international security issues, 395
junk, 599, 608–609, 845, 846
private placements, 399, 627–629
puttable, 625–626
ratings, 608–610
security of, 395, 621–622
seniority of, 621–622
sinking funds, 624
types, 621–622, 635
yields on, 66–67, 597–602
yield spread between Treasury bonds and,
67, 599–602
Corporate financing, 355–377. See also
Financing decisions
debt, 357–358, 358, 363–366, 506n. See
also Corporate bonds; Debt financing;
Debt policy
equity, 358–363. See also Common stock;
Equity financing
initial public offerings, 384–394
secondary offerings, 394–399
venture capital, 379–383
financial institutions in, 358–359,
370–372, 867–871
financial markets and, 358–359
internal funds, 356–357
links between short-term financing and,
759–762
patterns, 355–358
Corporate governance, 871–880. See also
Ownership and controlrights issues, 398–399
secondary issues, 394–398
trust, 363
venture capital, 379–383
growth stocks, 90, 205–206
historic performance of capital markets,
162 –169
income stock, 90
trading of, 76–78
valuation of, 76–99
value stocks, 205–206
voting procedures, 360–361
Companies. See Corporations
Company cost of capital, 221–242. See also
Weighted-average cost of capital (WACC)
cost of debt, 224–225
cost of equity, 225–229, 512–514
defined, 222
determining, 222–223
expected return and, 442–443
for international investments, 722–723
nature of, 222–223
Company risk, 222–225
Comparables, 79–81, 230, 576
Compensat ion com m it tees, 310 –311
Compensation Discussion and Analysis
(CD&A), 311
Compensation plans
accounting measures of performance and,
311–320
chief executive officer, 302–311, 373
golden parachutes, 834
incentives for managers and, 302–311, 373
Competitive advantage, 284–287
economic rents and, 284–287
example, 288–294
Competitors
monitoring by, 306
in real option analysis, 590–591
Complementary resources, of merger
candidates, 817
Compound annual return, risk and,
16 4 –165, 165n
Compound calls, 588
Compounding intervals, 36–39, 47–50
Compound interest
compounding intervals, 36–39
defined, 20
Compound options, 566
Comroad, 383
Concentration accounts, 798–799
Confidence interval, 227
Conglomerate mergers, 814, 841–842
Conglomerates, 230
defined, 855
ownership and control of, 878–880
private-equity funds as, 855–858
Conrad, Joseph, 723n
Conseco, 858
Conservatism bias, 340
Consistency
in financial planning, 773–774
in valuation process, 523
Consolidated Edison, 174, 181, 196, 19 7, 200
Consolidation trend, 818–819
Consols, 27
Constant-growth formulas
dangers of, 88–90