I- 8 Index
bre44380_idx_I1-I24 8 09/30/15 01:56 PM
Financial Accounting Standards Board
(FASB), 656, 656n, 828–829
Financial analysis, 732–752
financial ratios, 732–752
Home Depot financial statements, 734–752
Financial assets, 2. See also Marketable securities
Financial crisis of 2007-2009, 11, 304–305,
308, 343–344, 374–375, 600–602, 623,
895, 896
Financial distress, 467–479. See also
Bankruptcy
incentives and, 471–472
leasing and, 654–655
nature of, 467
risk management and, 674–675
trade-off theory of capital structure, 467,
481–482
type of asset and, 476–477
without bankruptcy, 471– 479
Financial engineering, 535
Financial institutions, 358–359, 370–372,
869–871. See also Financial crisis of
2007–2009
Financial intermediaries, 358–359, 368–375.
See also Financial crisis of 2007–2009
role of, 368, 372–375
types, 368–370. See also Ba n k(s);
Financial institutions; Investment
funds
Financial leases, 660–666, 744n
advantages of, 665–666
capitalizing, 656
defined, 653
example, 660–661
net value of lease, 662–664
ownership of asset, 661
requirements for, 656
salvage value for depreciation, 659
as source of financing, 653
taxes and, 661–662
valuing, 660–664
Financial leverage
cost of equity capital and, 435–437
defined, 437, 744
effect in competitive tax-free economy,
437– 442
Modigliani-Miller approach, 438–454
traditional approach, 437
impact on expected stream of earnings per
share, 442–443
leverage ratios, 744–746
measur ing, 744 –746
Financial managers
compensation and incentive plans for,
302 –311, 373
ethical issues, 10–12
financial fraud and, 10–12
lessons of market efficiency and, 344–349
role of, 7
separation of ownership and control and,
6, 12–13, 830–831, 871–880
value maximization and, 7–13, 17–18,
249–271
Financial markets, 366–375, 867–871. See also
International finance
crisis of 2007–2009, 11, 304–305, 308,
343–344, 374–375, 600–602, 623,
895, 896forecasting market values in, 279–282
Expectations theory of exchange, 710–711
Expectations theory of forward rates, 713–714
Expectations theory of term structure, 58–59
Expected returns
capital asset pricing model and, 200–201,
227–229
estimates of, 200–201
traditional approach to capital structure
and, 442–443
Export-Import Bank, 795n
External financing, 481, 777–778
Exxon Mobil, 3, 7, 207, 366–367, 368n, 411,
473, 737, 738, 739, 740
Ezzell, J., 506n
Ezzell, R., 515F
Fabozzi, F. J., 71, 643, 668, 806
Facebook, 3, 813, 878
Face value, defined, 47
Factoring, 795
Fair Isaac & Co. (FICO), 609n, 792 n
Fair market rent, 281, 281n
Fair price defense, 834
Faleye, O., 360n
Fallen angels, 608
Fama, Eugene F., 167n, 205 n, 209, 209n, 335 n,
350, 478n, 482 n, 713 n, 891, 891n
Fama-French three-factor model, 208–210,
225 n, 333 n
Family control, 877–878, 879
Fanjul, G., 846n
Fannie Mae, 52, 344, 374, 624, 802, 852
Farm Credit Financial Assistance Corporation,
802 n
Farre-Mensa, J., 430
Fawcett, S. E., 384n
FCX, 137
FDA (U.S. Food and Drug Administration),
266–269, 590
Federal agency securities, 802
Federal Deposit Insurance Corporation
(FDIC), 607
Federal Express, 383
Federal Family Education Loan (FFEL), 607
Federal funds rate, 637n
Federal Home Loan Mortgage Corporation
(Freddie Mac), 52, 344, 374, 624,
802, 852
Federal National Mortgage Association
(FNMA; Fannie Mae), 52, 344, 374, 624,
802, 852
Federal Power Commission v. Hope Natural
Gas Company, 86 n
Federal Reserve Bank of New York, 343
FedEx, 263, 383
Fedwire, 798
Ferguson, M., 600n
Fernandez Acín, I., 166n, 186
Fernandez, P., 166n, 186
Ferrari, 850
Fiat, 471, 853
Fiat Chrysler, 3, 850
Fidelity Investments, 369
Fiduciary duty, 872Equity investors, 4
Equity-linked bonds, 635
Equity Office Properties, 844, 853
Equity valuation, 76–99
book value, 78–79
common stock, 78–85
comparables in, 79–81, 230
discounted-cash-flow (DCF) formula in,
81–90, 93–98
dividends and, 81–90
earnings per share (EPS) in, 78, 79, 90–93
estimating cost of equity capital, 85–90
stock price in, 76–78
trading, 76–78
Equivalent annual cash flow, 148–150
def ined, 148
inflation, 148–150
long- versus short-lived equipment, 149
net present value analysis, 149–150
in replacement decisions, 150
taxes and, 150
technological change, 149
Equivalent annual cost, operating leases and,
657–659
Equivalent loans, 663
Erb, C., 723n
Esty, B. C., 643
Ethical issues, 10–12. See also Agency theory
corporate raiders, 11
frauds, 10–12
short selling, 11
tax avoidance, 11–12
Eurex Exchange, 682
Euribor (euro interbank offered rate), 801
Eurobonds, 365, 395, 629
Eurocurrency, 365, 801
Eurodollars, 801
Euro interbank offered rate, 801
Euronext, 77, 77n, 680 n
European Central Bank, 68–69
European Monetary Union (EMU), 708n, 801
European options, 526–528, 551–552, 565–566
Euros, 365, 708n
Eurozone debt, 68–69
EVA Dimensions, 737, 741
Evans, M. D., 726
Event risks, 627
Everett, S. J., 838
Evergreen credit, 637
Excess capacity, equivalent annual cash flow
and, 150 –151
Exchange rates. See also Foreign exchange risk
changes in, 711–712
interest rates and, 710
trusting market prices, 345
Exchange-traded funds (ETFs), 78, 369
Executive stock options. See Stock options
Exotic securities
asset-backed securities, 618, 622–623,
635, 636, 641
innovation in bond market, 634–636
and violation of Modigliani-Miller
approach to capital structure, 451
Expansion option, 263–264, 525–526, 773
exploiting new technology in, 288–294
flexible production, 583–587
follow-on investment opportunities,
573–577