Index I-11
bre44380_idx_I1-I24 11 09/30/15 01:56 PM
financial statements, 733–734
imputation tax systems, 425–426, 478n
inflation rates by country, 61, 65
initial public offerings, 384, 391, 396
international money market, 801–802
leasing in, 666, 666n
mergers, 813, 834–835
net present value in other countries,
145 –146
ownership and control, 871–880
perpetuities in, 27–28
privatization in, 851–852
restructuring, 851–855, 862–863
risks in. See International risks
security issues, 395
sovereign debt, 67–69, 375
standard deviations of stocks in, 172,
173, 174
stock market returns, 172, 173
stock repurchases, 413
taxation of multinational companies,
11–12
venture capital, 383
weighted-average cost of capital (WACC),
224–225
International Financial Reporting Standards
(IFRS), 734
International Fisher effect, 712n
International Monetary Fund (IMF),
68–69, 896
International Power, 649
International projects. See Project finance
International risks, 707–726
foreign exchange risk, 707–723
basic relationships, 709–717
economic exposure, 719
foreign exchange market, 707–723
hedging currency risk, 717–719
international investment decisions,
720–723
transaction exposure, 719
political risk, 723–725
purchasing power theory, 714–715
International Securities Exchange (ISE), 526n
International Swap Dealers Association
(ISDA), 60 0n, 601
International Swaps and Derivatives
Association, 687n
Internet bubble, 339, 341, 348, 374, 383,
388, 389
Inventory management, 788–790
Inventory period, 765, 766
Inventory turnover, 742
Investment banks, 371, 389
Investment decisions. See also Capital
budgeting; Project finance
capital budgeting process for, 250–252
defined, 2
examples, 2–4, 3, 4–5
financing decisions versus, 5, 138,
141, 329
investment trade-off, 9–10
market value in, 279–282
net present value (NPV) and, 105–109,
132 –151
alternatives to, 107
book rate of return versus, 108–109
cash flow in, 132–138Interest coverage, 745–746
Interest rate(s). See also Term structure of
interest rates
on bank loans, 637
bond prices and, 50–54
bond terms and, 51, 619–621
in bond valuation, 47–54, 60–63
exchange rates and, 710
Fisher’s theory of, 63–64, 712n
inflation rates and, 60–63, 712–717
on money-market investments, 800–801
nominal versus real, 61–63, 715–717
option value and, 537–539
real, 60–63
Interest rate parity, 710, 713
Interest rate risk
in bond valuation, 54–60
hedging, 676, 691–693
Interest rate swaps, 687–689
Interest tax shields, 461–464
personal taxes and, 464–466
value of stockholders’ equity, 462
Intermediaries, 368
Internal capital market, 855–858
Internal diversification, 879
Internal growth rate, 777–778
Internal rate of return (IRR), 107, 111–119
calculating, 112–113
IRR rule, 107, 113
in lending versus borrowing, 113–114
mod i f ie d, 115n
more than one opportunity cost of
capital, 118
multiple rates of return and, 114–115
for mutually exclusive projects, 115–118
spreadsheet functions, 122
verd ict on, 118 –119
Internal Revenue Service (IRS), 144, 423,
423 n, 501 n, 661–662, 661n, 800
International Accounting Standards Board
( I ASB), 656n, 734
International banking facilities (IBFs), 802
International finance, 867–885. See also
Financial crisis of 2007–2009; names of
specific countries
accounting standards, 656n, 734
adjusted present value, 511
average market risk premiums, 167
banks in, 799
beta for selected foreign stocks, 182
bonds in, 365, 629
bubbles in, 339
cash management, 799
CEO compensation, 307, 308, 309
comparative inflation rates, 60–61, 65
comparisons across countries, 867–871
compounding intervals in, 47–48, 48n
conglomerates, 878–880
corporate names, 5n
cross-border mergers, 813, 829–830
currency options, 678
defaulting debt, 598
discount rates for international
projects, 235
dual-class shares, 361, 878
exchange risk and, 720–723
financial markets and institutions, 395,
867–871Indexing, 180
Indirect quote, 707–708
Industrial and Commercial Bank of China,
851, 852
Industrial Bank (China), 174, 182
Industry beta, 227
Industry consolidation, mergers and, 818–819
Industry structure, components of, 285
Inefficiency
eliminating, 818
mergers and, 818
Inflation rates
in bond valuation, 60–63
Consumer Price Index (CPI), 60
by country, 61, 65
equivalent annual cash flow, 149
exchange rates and, 711–712
interest rates and, 60–63, 712–717
international rates, 65
in net present value analysis, 137–138
nominal interest rates and, 63–64
in term structure of interest rates, 60
Inflation swaps, 691
Information asymmetries, 479–481, 826–827
Information effect. See also Signaling
information provided by financial
markets, 373–374
investor response to, 334–335
market reaction to stock issues, 396–398
for mergers, 826–827
of payout policy, 413–415
in semistrong market efficiency, 332,
333–334, 888
in sensitivity analysis, 253–254
of stock repurchase plans, 414–415
in strong form of market efficiency, 332,
334–335, 888
in weak form of market efficiency, 332,
344–345, 888
Information memo, 638–639
ING, 375
Initial public offerings (IPOs), 384–394, 854
arranging, 385–387
bookbuilding method, 392–393
new-issue puzzle, 337
sale of, 389–392
underpricing of, 389–392
underwriters of, 387–388
winner’s curse and, 390, 390n, 394
Installment plan costing, 29–30
Institutional investors
initial public offerings and, 386–387
private placements and, 399, 627–629
Insurance, 676–678
credit, 795n
portfolio, 562
risk transfer and, 676–677
Insurance companies, 371–372
Intangible assets
applying net present value rule, 132–133
in equity valuation, 79
investment option, 587–588
in merger accounting, 829
nature of, 19
Intel, 382, 383, 761
Intercompany loans, 870
Intercontinental Exchange (ICE), 77n, 680 n,
681, 682 n