rates of return 304 307 risk free 311 312 350 396 term structure of interest on

Rates of return 304 307 risk free 311 312 350 396

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rates of return, 304 , 307 risk-free, 311 , 312 , 350 , 396 term structure of interest on, 396 U.S. Treasury bonds bond market, 248 –252 futures contracts in, 774 –776 price quotes, 251 , 252 pricing, in hedging, 771 , 772 relation to TIPS, 255 , 255 n tax exemptions on, 244 Government bonds United Technologies Corporation, 720 , 721 Universal Studios, 410 Unlevered beta, 567 –568 Unlevered cash flow (UCF), 555 n, 555 –558 Unlevered firms, 489 Unlimited liability for debts, 4 Unocal, 881 , 897 –898 Unremitted cash flows, 951 Unseasoned new issue, 617 , 619 , 624 Unsecured loans, 812 Unsystematic risk diversification and, 347 –348, 349 , 376 –378, 378 n, 380 weighted average of, 377 , 377 n Unsystematic variability, 886 Unused debt capacity, 883 Upper bound, 686 Up state prices, 729 –730 Uses of cash, 797 Utilization ratios. Asset management ratios V Vail Resorts, 34 VA Linux, 428 Value of cash flows ( Discounted cash flow valuation) cost and, 22 n, 22 –23 dilution of, 640 –641 of firm ( Value of firm) FV ( Future value) NPV ( Net present value) of options ( Option valuation) PV ( Present value) Value additivity, 136 –137 Value creation cash flow and, 7 –8
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as goal of financial management, 10 –12 growth opportunities and, 279 –280 in leveraged buyouts, 905 –906 measuring, with event studies, 898 through sell-offs, 907 value-creating decisions, 428 –430 Value factor, 385 , 276 , 280 , 397 Value of firm changes in capital structure and, 492 , 493 n, 493 –495 debt–equity exchange and, 511 –512 debt financing and, 500 –502 discounted cash flow valuation, 120 –121 effects of negative NPV projects, 281 –284 effects of warrants on, 746 n, 746 –748 elements of, 75 financial leverage and, 491 –495, 506 –508, 507 n, 513 high-risk projects and, 525 –526 impact of retention ratio on, 282 –284 levered firms, 489 –490, 505 , 506 –508 marketable claims and, 532 maximization of, 489 –490, 490 n shareholder interests and, 489 –490, 490 n start-ups, 723 –726 Value portfolios, 384 , 385 Value stocks, 449 n, 449 –450, 450 n Vanguard High Yield Corporate Bond Fund (HY Fund), 246 Vanguard 500 index fund, 441 –442 Vanguard Intermediate-Term Treasury Bond Fund (TB Fund), 246 Variable costs, 208 , 209 Variables, in Monte Carlo simulation, 214 –217 Variance of asset, call option value and, 688 –689 calculations required for, 330 n estimating, in Black–Scholes model, 695 expected return and, 330 n, 330 –332 minimum variance portfolio, 340 –341, 342 of portfolios, 336 –337, 338 , 345 –347, 361 as proper measure of risk, 357 riskless lending and, 350 in risk statistics, 313 –314, 357 on securities’ return, 329 variance of, 338 , 345 –347, 361 Venture capital, 642 , 646 stages in financing, 644 n, 644 –645, 645 n suppliers of, 643 –644 Verizon Communications, 339 Vertical acquisition, 877 Vertical integration, 881 Viacom, 410 Visa, 616 , 627 Volatility of return, 734 –735 Volatility of stock, 690 Voluntary petition, 925 Volvo AB, 7 Voting rights, 469 –470 Vultures, 923 W
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WACC. Weighted average cost of capital Wachovia Corporation, 720 , 721 Wages, 811 Waiting period, 616 , 617 , 14 , 694 on average dividend yield, 397 exchange rate quotations, 935 –937 futures contract listings, 765 , 766 information released by, 440 n stock market reporting by, 291 –292 U.S. Treasury bond price quotes, 251 , 252 Wal-Mart, 50 , 281 , 289 –290, 606 Walt Disney Company, 221 , 240 , 339 , 410 , 908 WaMu (Washington Mutual), 629 Warf Computers case, 41 –43, 675 Warner Brothers, 206 , 410 Warrants, 744 n, 744 –745, 758 on bonds, 478 call options compared, 744 , 745
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