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Unformatted text preview: 16 Investment Banking and the Public Sale of Equity Securities Part 1: Introduction 1 The Scope of Corporate Finance 2 Financial Statement and Cash Flow Analysis 3 Present Value Part 2: Valuation, Risk, and Return 4 Bond and Stock Valuation 5 Risk and Return 6 Risk and Return: The CAPM and Beyond Part 3: Capital Budgeting 7 Capital Budgeting Process and Techniques 8 Cash Flow and Capital Budgeting 9 Risk and Capital Budgeting Part 4: Capital Structure and Dividend Policy 10 Market Efficiency and Modern Financial Management 11 An Overview of Long-Term Financing 12 Capital Structure: Theory and Taxes 13 Capital Structure: Nontax Determinants of Corporate Leverage 14 Dividend Policy Part 5: Long-Term Financing 15 Entrepreneurial Finance and Venture Capital 16 Investment Banking and the Public Sale of Equity Securities 16.1 Investment Banking 16.2 Legal Rules Governing Public Security Sales in the United States 16.3 The U.S. Market for Initial Public Offerings 16.4 Seasoned Equity Offerings in the United States 16.5 Private Placements in the United States 16.6 International Common Stock Offerings 16.7 Summary 17 Long-Term Debt and Leasing Part 6: Options, Derivatives, and International Financial Management 18 Options Basics 19 Black and Scholes and Beyond 20 International Financial Management 21 Risk Management and Financial Engineering Part 7: Short-Term Financing Decisions 22 Strategic and Operational Financial Planning 23 Short-Term Financial Management Part 8: Special Topics 24 Mergers, Acquisitions, and Corporate Control 25 Bankruptcy and Financial Distress Use the learning tools at http://smartfinance.swcollege.com OPENING FOCUS Two European Telecoms Launch Rights Issues to Avert Financial Disaster It is often said that the threat of disaster concentrates the mind, which was certainly true for the worlds largest telecommunications firms during the bleak period after the steep decline in high-tech stocks in March 2000. After a decade of extremely rapid growth in capital spending, fueled primarily by unprecedented borrowing from banks and bond markets, many telecom companies found them- selves teetering on the brink of bankruptcy by the summer of 2001. Slower-than-expected revenue growth, coupled with higher-than- expected costs incurred to roll out third-generation cellular tele- phone networks, had left most of the large European operators with dangerously high debt levels. Without reducing their outstanding debts, firms risked seeing their credit ratings plummet. In order to avert the prospect of financial meltdown, two of the largest European telecomsBritish Telecom (BT) and The Nether- lands KPNtook the highly unusual step of launching immense rights offerings of common stock. BT raised 5.9 billion ($8.5 billion) in June 2001, and KPN issued 5 billion ($4.5 billion) six months later, making these the two largest rights offerings in history. Rights offer- ings are stock issues sold exclusively to a firms existing shareholders.ings are stock issues sold exclusively to a firms existing shareholders....
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