Index I-5K
Keebler Foods Co., 400
Kellogg Co., 400
L
Law of one price, 547
Leverage, capital structure and, 400
LIBOR, 551
Limited liability company
(LLC), 7
Limited liability partnership
(LLP), 7
Line of credit, 496
Liquid asset, 88
Liquidity premium (LP), 172
Liquidity ratios, 88, 88–89
Lockbox, 486
Low-regular-dividend-plus-
extras, 451
M
Macroeconomic factors, and
interest rate levels, 183–185
Managed-# oat regime, 541
Managerial conservatism/
aggressiveness, 402
Managers, stockholders, and
bondholders, con! icts
between, 18–21
Managers vs. stockholders, 18
Marginal investor, 12, 275
Marginal tax rate, 70
Market, measuring the, 45
Market (beta) risk, 375
Market ef" ciency, conclusions
about, 50
Market for common stock, 40–43
Market instruments, summary of, 32
Market interest rates,
determinants of, 168–174
Market portfolio, 244
Market price (P 0 ), 11, 276
Market risk premium, 251
estimating, 252
Market risk, 243
Market value ratios, 99
Market, initial public offering
(IPO), 41
Market/book (M/B) ratio, 100
Marketable securities, 487
cash and, 485–488
Markets,
" nancial, 30–34
tale of three, 229
Maturity date, 197
Maturity matching approach, 476
Maturity risk premium
(MRP), 173
McDonald’s, 534
global Big Mac prices, 548–549
Merrill Lynch, 16, 29, 47, 229, 273,
316, 499
Microsoft, 3, 7, 14, 28, 45, 271, 283,
368, 440, 459, 460, 469, 485, 487
Mission statement, 51 1
Moderate current asset policy, 475
Modi" ed IRR (MIRR), 347–349
Modigliani-Miller theory, 419
Monetary arrangements,
current, 541
Money market, 30
Money market funds, 35
Monte Carlo simulation, 379
Mortgage bond, 215
Multinational corporations,
535 –538
Multinational " nancial
management, 534
U.S. " rms, 534
vs. domestic, 538–539
Multiple IRRs, 344, 344–345
Municipal bonds, 196
Mutual funds, 35
Mutual of Chicago Insurance
Company, 298
Mutually exclusive projects,
340, 352N
Nasdaq, 38, 45
Negative working capital,
operating with, 481
Net income vs. economic value
added (EVA), 108
Net present value (NPV), 338–341
Net present value pro" le, 349
Net working capital, 60, 339, 473
New World Chemicals Inc., 531
New York Stock Exchange, 38
Nominal (quoted) risk-free rate,
rRF , 170
Nominal (quoted, or stated)
interest rate, INOM, 148
Nonconstant growth stocks,
valuing, 283–286
Nonnormal cash # ows, 344
Normal cash # ows, 344
Normal yield curve, 176
Northwest Milling Company, 198
NPV compared to IRR, 343
NPV pro" les, 349–353
Number of periods (N),
" nding, 139
Number of years, N, " nding, 134O
Operating breakeven, 405
Operating income, 61
Operating leverage, 405
Operating margin, 96
Operating plan, 512
Opportunity cost, 131, 367, 371
and assets, 367
Optimal capital budget, 385
Optimal capital structure, 401, 416
determining, 413–419
Optimal dividend policy, 442
Option value, 383
Ordinary (deferred) annuity, 135
Original issue discount (OID)
bond, 197
Original maturity, 198
Over-the-counter (OTC) market, 39
Oversubscribed, 41P
P/E multiple approach, 290
Paci" c Timber Company, 198
Par value, 197
Partnership, 7
Payables deferral period, 479
Payback period, 353–355
Payment (PMT), 143
Payment date, 454
Payment! oat, 487
Payment procedures, 453
Permanent current assets, 476
Payout ratio, 446
Perpetuity, 141–142
Phillips Petroleum, 460
Physical location exchanges, 39
Political risk, 557
Porter Electronic Controls Inc., 457
Portfolio context, risk in, 240–249
Portfolio investments, 551
Portfolio risk, 242, 245
Post-audit, 386
Preemptive right, 272
Preferred stock, 291–292
Premium bond, 203
Premium on forward rate, 545
Present value (PV), 125, 131–133
of an ordinary annuity, 138–139
Price/earnings (P/E) ratio, 99
PricewaterhouseCoopers (PWC), 14
Primary market, 30
Prime rate, 497
Private equity companies, 36
Private market, 31
Probability distribution, 233
Procter & Gamble, 33, 283, 460
Production opportunities, 163
Pro" t margin, 96