I-5IndexI-5average debt–equity ratios 466
average investment in accounts
receivable (AIAR) 645
average payment period (APP) 45, 630 ,
671
lengthening 632
average returns see nominal returns
average shares 235–6
average tax rate 54
B
Baby Boomers 9
bad debts 646 – 7
balance forward 651
balance sheets 31–3, 315–16, 574, 704
balloon payment 505
bank account analysis statement 665–6
Bank Bill Swap Rate (BBSW) 501,
678–9
bank overdraft 678 , 679–80
bank shares 15
bank-accepted bills 590, 680
bank-accepted commercial bill 509
bank-endorsed bills 680
banking sector 7–8, 14
bankruptcy 483, 520, 525, 764 , 772
basis points 144
basis risk 804 – 5
BBB rating 145–6
bearer bonds 514
bell curves see normal distribution
beta 225–6, 232, 234, 236, 243, 401,
401–2, 404, 408, 619–20
global market betas 241–2
bid price 182, 614
bid–ask spread 182, 614
bidders 733 – 4
returns to 737 – 8
bills 206
average returns and standard
deviation 205
nominal and real returns on 195–7
real returns 213–14
see also Treasury bills
Bills of Exchange Act 1909 (Cth) 680
binomial model 283–8
binomial option pricing model 283
Black–Scholes model 288–91, 296
board of directors 18, 536, 752 , 769
duties in M&A context 752 – 3
powers and obligations 773–4
voluntary administration and 767 ,
773
bond indenture 142, 510
bond issue 511–13
bond markets 143–6
bond prices 124–36, 129, 131–2, 141
quotations 143–4
bond rating 144–5, 144–6, 514
fixed versus floating rates 138–9
versus spreads 146
bondholders 21, 138, 159, 406, 508
cash flows under capital structure 478
conversion feature and 124
returns to 739 – 40
bonds 92, 159, 201, 210, 508–19
average returns and standard
deviation 205
corporate see corporate bonds
discounts and premiums 516–19
by features 138–42
flotation or issuance costs 519
by issuer 137–8
nominal and real returns on 195–7
real returns 213–14
refunding options 515–19
senior/junior standing 139
types 136–42, 508–10
valuing 121–51, 156
vocabulary 124
bonus shares 540
book building 442
book equity 575
book value 52, 174, 175, 315–16, 317,
363, 367
bookrunner 442
boom-and-bust investment cycles 705
venture returns and returns on small
share mutual funds, correlation 705
borrowing 78, 525, 526, 664 , 679
borrower risk 504
lending versus borrowing (IRRs) 330
see also short selling
bottom-up sales forecast 578
brand value 173
breakeven point (BEP) 29, 410–12
budget 585–91
Build–own–operate–transfer (BOOT)
project 508
bulge bracket 440
business
case study 303–4
corporate finance, role 5–10
globalisation of 7
business combinations see acquisition
business cycle 228–9business failure 763–5
business organisational forms 16–20
business plans 693
business risk 473
business-to-business environment 641 ,
667–8
bust-up 745
buyer–seller relationship 718
buyouts 689C
call feature (bond issue) 124, 512, 515
call option 263
call option payoffs 269–71
call options 419, 806
call premiums 516
call price 142, 512, 516
callable bonds 142
cancellation option 701
cannibalisation 370
capital 5, 14, 364–5, 435–8, 525,
619–20, 690 , 693
capital asset pricing model (CAPM)
191–2, 225–6, 243–9, 251, 401,
408–10, 620, 730
capital budgeting 11, 309, 310–12,
338–42, 353, 397, 522, 617–19
by country 338
human face of 381–3
problems 376–80
risk and 400–21
strategy and 420–1
worked example 311–12
capital funding 324
capital gain 54, 141, 192, 541, 552
capital indexed bonds 139
capital loss 54, 192, 773
capital markets 15, 435–8, 545–7
bonds in 138–42
see also perfect capital markets
capital rationing 376–7
best projects selection 377
new shares, reason for not issuing
376–7
capital structure 467–90, 480, 489, 491
agency costs and 484–6
irrelevance 473–4
M & M model with taxes 477–81
M & M propositions 472–7
pecking-order theory 488–90
targets 477
trade-off model 482–7
capital structure decisions 10, 475