I- 6 Index
bre44380_idx_I1-I24 6 09/30/15 01:56 PM
sovereign bonds, 67–69
value at risk (VAR), 613–614
yields on money-market investments, 801
yield to maturity, 604–607
Deferred taxes, 501n
Defined-benefit pension plans, 370n, 704
Defined-contribution pension plans, 370,
370 n, 704 n
Deflation, 61, 63n
DeGeorge, F., 320, 320n
Degree of operating leverage (DOL), 231n,
258, 258n
Degrees of freedom, 170n
De Jong, A., 337n
Dell Computer, 790, 844
Del Monte Foods, 844
Delphi, 817, 859
Delta Air Lines, 680, 739
Demirguc-Kunt, A., 481n
Denis, D. J., 411n, 627 n, 628 n, 636 n
Depreciation
accelerated, 142–144, 146n, 395 n, 655
biases in calculating returns, 316–317
investment decisions and, 142–144
salvage value, 137, 139–140, 659
straight-line, 139–140, 144, 655
tax shield, 142–144, 522–523, 654, 657n,
659, 661–662
Derivatives, 676, 678–691. See also Forward
contracts; Futures contracts; Option(s);
Swaps
Descartes, René, 114n
Deutsche Bank, 77, 330–331, 331, 388, 816,
873, 876
Deutsche Börse, 77
Deutsche Telecom, 636
Devarajan, S., 283n
Devon Energy, 80, 80
Dewenter, K. L., 414n
Diamond, D., 364n
DIAMONDS, 369
Diet deals, 845–846
Digital (binary or cash-or-nothing)
options, 566
Dill, D. A., 664n
Dilution, in convertible valuation, 633
Dimitrov, O., 339n
Dimon, James, 415
Dimson, E., 61n, 65n, 162 –16 4, 162n, 163n,
164n, 166 –167, 167n, 168 n, 170 n , 173n ,
186, 716n
Direct debit, 797–798
Direct deposit, 798
Direct leases, 653
Directors. See Board of directors
Direct payment, 797–798
Direct quote, 708
D i r e c t T V, 813
Dirksen, Everett, 618n
Disbursements, controlling, 768–769, 796–798
Discount, bond, 48
Discounted cash flow (DCF)
in business valuation, 93–98
in calculating present value, 25–26
in common stock valuation, 81–90
dangers of constant-growth formulas,
88–90
defined, 25short-term, 769–772
bank loans, 770
commercial paper, 618, 640–641
long-term financing versus, 364
short-term financing plan, 769–772
stretching payables, 768
Debtor in possession (DIP), 861
Debt policy, 436–486
costs of financial distress, 467–479
agency costs, 474– 476
ba n k r uptcy, 467– 471
nature of financial distress, 467
trade-off theory of capital structure,
467, 477– 479
varying with type of asset, 476–477
without bankruptcy, 471– 479
effect of leverage in competitive tax-free
economy, 437– 4 42
pecking order of financing choices,
479– 484
financial slack, 482–483, 496–498
impact of asymmetric information,
479 – 481
implications of, 481
trade-off theory versus, 481–482
taxes and, 461–464
interest tax shields and stockholders’
equity, 461–464
personal taxes, 464–466
weighted-average cost of capital (WACC),
448–452, 491–496
Debt ratios, 357–358, 358, 460, 481, 506n,
744 –745
Debt valuation, 619–629
convertible securities, 630–634
default risk in, 604–607
credit ratings, 66, 608–610
government loan guarantees, 607
junk bonds, 608–610
duration in, 52–54
inflation in, 60–63
interest rate risk and, 54–60
nominal rate of interest and, 61–63
real rate of interest and, 60–63
term structure of interest rates and, 54–60
volatility in, 54
yields on corporate debt, 66–67, 597–602
Decision trees, 263–269
abandonment option, 264–265
binomial method of option pricing and,
556 –557
defined, 263
example of use, 266–269
expansion option, 263–264
pros and cons of, 269
uses of, 263–266
Declining industries, 881–882
Deep-in-the-money projects, 119n
Deere, 652
Default option, 602–607, 626
Default puts, 603–604
Default risk, 229n, 604–607. See also
Bankruptcy
calculating probability of default, 609–613
corporate bond, 64–69
credit ratings, 66, 602, 608–610
credit scoring and, 609–610
market-based risk models, 610–613Credit Suisse, 388
Cross-border leasing, 666, 666n
Cross-border mergers, 813, 829–830
Crowdfunding, 382
CSX, 80, 227
Cumulative capital requirements, 760
Cumulative preferred stock, 363
Cumulative voting, 360–361
Currency futures market, 709
Currency risk. See Foreign exchange risk
Currency swaps, 689–690
Current assets, 735, 760–761
Current liabilities, 502, 735
Current ratio, 747
Current yield, 48
Cusatis, P. J., 849n
Cutoff date, in payback period, 109–111
Cutrale-Safra, 835
Cyclicality, asset beta and, 230
D
Dabora, E., 337n
Daimler AG, 853, 873, 876
Daimler-Benz, 815, 873, 873n, 874
DaimlerChrysler, 853
Dakota, Minnesota & Eastern Railroad, 285n
Daley, J. P., 779
Daley, L. V., 849n
Dalian Commodity Exchange (China), 681
Danone, 827
Data-mining/data snooping, 206, 609–610
Davis, S. J., 846n
Davydenko, S. A., 863, 863n
DBRS, 608n
Dealer markets, 77
DeAngelo, H., 426n, 430
DeAngelo, L., 426n, 430
Death-spiral, 634–635
Debentures, 621
Debt capacity, 508–509, 523
Debt covenants, 626–627, 640
Debt-equity ratio (D/E), 443–444, 503–505,
656–657
Debt financing, 363–366, 597–615, 618–643.
See also Bond(s); Corporate bonds; Debt
policy; Debt valuation; Financial leases;
Leasing
asset-backed securities, 618, 622–623,
635, 636, 641
bank loans, 636–640
debt ratios, 357–358, 358, 460, 481, 506n,
744 –745
in disguise, 365–366
forms of debt, 364–365, 618–643
international security issues, 395
long-term, 619–629
choosing a plan, 776–777
contingency planning, 773
example, 774–776
pitfalls in model design, 776
short-term financing versus, 364
medium-term notes (MTNs), 618, 641,
803, 804
private placements, 399, 627–629
relative amount of, 357–358
secondary offerings, 394–399