Index I-17
bre44380_idx_I1-I24 17 09/30/15 01:56 PM
as takeover defense, 834
Return on assets (ROA), 312n, 740 –741,
743 –744
Return on capital (ROC), 312n, 739, 740
Return on equity (ROE), 86–90, 740, 746
Return on investment (ROI)
biases in, 314–320, 319–320
net, 312
Revenue adequacy, 88
Reverse floaters (yield-curve notes), 635
Reverse stock splits, 362, 362n
Revlon, 832n
Revolving credit, 637
Revsine, L., 752
Reynolds American, 813
Rhee, S. G., 231n
Rhie, Jung-Wu, 610, 610n, 611 n
Rice, E. M., 891n
Richardson, M. W., 339n, 377, 623n
Richemont, 719
Riddiough, T. J., 579n, 580n
Rieker, M., 415n
Rights issues, 387n, 398–399
Right to default, 467–468
Risk. See also International risks;
Portfolio risk
of an option, 560
attitudes toward, 340
capital asset pricing model (CAPM) and,
199–202, 227–229
company, 222–225
compound annual return and, 164–165,
165 n
counterparty, 679
default, 64–69, 604–607
diversifiable (specific), 176, 176n,
181–182, 192, 230, 232–234
expected return and, 199–202
foreign exchange, 707–723
of foreign investments, 235
market. See Market risk
option pricing and, 540–541, 549–551,
613 – 614
political, 723–725
pooling, 373, 676–678
portfolio. See Portfolio risk
present value and, 23–24
project, 222–225, 229–235
return and, 890–891
short-termism and, 880–881
in term structure of interest rates, 59–60
Risk-adjusted discount rate, 236–239
Risk arbitrage, 835n
Risk aversion, 8
Risk class, 82
Risk-free rate of interest, 532n
Risk management, 673–698, 894
agency costs, 674, 675–676
derivatives in, 676, 678–691
evidence on, 676
financial distress and, 674–675
forward contracts, 679
hedging
defined, 673–674, 679
with futures contracts, 680–686,
691–693
setting up hedge, 691–695
insurance, 562, 676–678optimal timing for development of,
579–580
Real estate investment trusts (REITs), 229,
229 n, 363, 476n
Real exchange rates, defined, 715n
Real options, 262–266, 573–592
abandonment option, 264–265, 526,
580–582
conceptual problems, 589
decision trees and, 263–266
default option, 602–607, 626
default risk, 604–607
defined, 263
examples, 525
expansion option, 263–264, 288–294,
525–526, 573–577, 773
investment option, 263–264, 279–282,
288–294, 525, 526, 573–577, 587–588
practical challenges, 590–591
production option, 265–266, 583–587
purchase option, 585–587
timing option, 146–147, 266, 577–580
valuing, 589–591
Real rates of interest, 60–63
in bond valuation, 60–63
determinants of, 63
indexed bonds and, 62–63, 62n, 64
nominal interest rates versus, 61– 63,
715–717
Real-time, gross settlement system, 798n
Rebalancing debt, 506
Receivables turnover, 742–743
Red herring, 386n
Registered bonds, 47n, 621
Registered shares, 360
Registration statement, 385–386
Regular cash dividends, 412
Reinhart, Carmen M., 377, 896, 896n
Relational Investors, 11
Relative risk, 223
Relative tax advantage of debt, 464–465
Relevering beta, 505, 506n
Rental leases, 653
Reorder point (two-bin) system, 790n
Replacement decisions, equivalent annual cash
flow and, 146, 150
Replicating portfolio, 549
Repurchase agreements (repos), 803,
804–805
Repurchase programs. See Stock repurchases
Reserve Primary Fund, 451n, 800
Residual claims, 359, 366
Residual income. See Economic value added
( E VA)
Residual risk. See Specific (diversifiable) risk
Restricted stock, 309, 310
Restricted voting rights defense, 834
Restructuring, 843–865
asset/liability, 834
asset sales, 851
of AT&T, 848, 848, 849
bankruptcy, 467–471, 858–863
carve-outs, 850–851
leveraged buyouts, 843–847
leveraged restructurings, 847
private equity, 855–858
privatization, 851–852
spin-offs, 849, 850market reaction to stock issues,
396–398
rights issues, 398–399
Publicis Group, 813
Purchase method of merger accounting,
828–829
Purchase option, 585–587
Purchasing power parity, 712, 712n,
714 –715, 719n
Pure plays, 230
Puri, M., 383n
Put-call parity, 531–533, 533n
Put options
in reducing risk, 678
relationship between call prices and, 552,
603
selling, 528–529
valuation of, 551–552
Puttable bonds, 625–626
P V. See Present value (PV)
PVGO. See Present value of growth
opportunities (PVGO)
Pyramids, 878
Q
QQQQs, 369
Quadratic programming, 197
Qualified institutional buyers, 399
Qualified opinions, 306
Quatar Petroleum, 856n
QUBES, 369
Quick ratio, 747–748
Quiet period, 385n
QVC, 834
R
Raghaven, Anita, 628n
Raiders, 11
Raiffa, H., 251n, 271
Rainbow options, 566
Rajan, Raghu G., 303n, 376, 481–482, 796n,
806, 871, 871n, 880, 880n, 881 n, 885
Rajaratnam, Raj, 334n
Rajgopal, S., 319, 319n, 320 n, 321
Rally Software, 396
Ramaswamy, K., 424, 424n
Random walk hypothesis, 329–332, 539n
Rate of return rule, statement of, 25
Rates of return. See also specific types return
accounting, 739–741
bond, 52
book, 107, 108–109, 119, 740
calculating, 162–164
defined, 52
on levered equity, 444–445, 449–451
present value and, 24–25
Rauh, J. D., 309n
Rau, P. R., 339n
Ravenscroft, D. J., 837, 837n
Ravid, S. A., 863n
Raviv, A., 486
Read, J. A., Jr., 590n, 683 n
Real assets, 2, 18
Real estate
investment decisions for, 279–282