swaps contracts 763 784 788 Williamson Mortgage case 794 Derived demand 862

Swaps contracts 763 784 788 williamson mortgage case

  • Notes
  • sarahadams1409
  • 336
  • 100% (1) 1 out of 1 people found this document helpful

This preview shows page 34 - 36 out of 336 pages.

swaps contracts, 763 , 784 –788 Williamson Mortgage case, 794 Derived demand, 862 Derived-demand inventories, 869 Designated Order Turnaround (DOT), 289 Deviations from rationality. Irrationality Differential growth stocks, 272 –273 Dilution, 639 –641 of capital gains, 393 –394 exercise of warrants and, 745 –747, 758 by poison pills, 896 of proportionate ownership, 639 repurchases offsetting, 585 of value, 640 –641 Direct costs, 14 of financial distress, 523 n, 523 –524, 524 n, 548 for new stock issues, 629 , 630 Direct leases, 652 Direct placement, 619 Direct quote, 935 –936 Direct rights offer, 619 Dirty price, 252 Disbursement float, 826 –827, 829 , 837 –838 Discount bonds, 236 –237, 241 , 242 n, 258 Discounted cash flow valuation, 87 –122 annuity, 109 n, 109 –115 compounding periods, 101 –105 growing annuity, 115 –116, 122 growing perpetuity, 107 –109, 108 n incremental cash flows, 171 –172 loan amortization, 116 –120 multiperiod case, 91 –101 one-period case, 87 –90 perpetuity, 106 –107, 122 riskless cash flows, 659 , 659 n spreadsheet applications, 99 , 111 , 119 , 121 valuation of firm, 120 –121 Discounted payback period method, 141 Discounting at aftertax interest rate, 662 –663, 663 n debt capacity and, 658 –660, 671 dividends vs. earnings, 284 incremental cash flows, 171 –172 multiperiod, 96 –97 nominal vs. real, 184 –186 present value and, 95 –98 in public issue of stock, 620 Discount rates, 88 , 280 n calculation of, 556 , 567 corporate rate, 409 estimated, capital budgeting and, 560 –562 in growing perpetuity formula, 108 IRR and, 142 , 151 , 153 lease vs. buy decision and, 661 PE ratio and, 286 of project, 392 –393 risk-adjusted, 395
Image of page 34
selection of, risk and, 90 in stock valuation, 271 , 275 –276 Cost of capital Required return Disney, 281 Dispersion of returns, 339 Distressed debt investors, 923 Distribution, 575 Diversification, 347 –350 acquisitions and, 886 , 886 n effective, 377 , 377 n essence of, 348 –350 information and, 347 in international firms, 951 options and, 703 –705 of portfolios, 376 –378, 377 n, 378 n, 386 power of, 314 , 347 risk and, 347 –348, 349 , 378 Diversification effect, 338 n, 338 –339, 340 , 341 –342 Divestitures, 906 –908 carve-out, 907 –908, 908 n sale, 906 –907, 907 n spin-off, 907 tracking stocks and, 908 Acquisitions Merger(s) Dividend(s), 292 , 575 –608 capital gains and, 268 –269, 269 n in cash ( Cash dividends) choosing over repurchases, 602 –604 on common stock, 470 , 470 n compound growth of, 93 content of information on, 592 n, 592 –593 as cost to firm, 393 –394 discounting vs. earnings, 284 earnings compared, 281 –282 effects of taxes on, 586 –590 fewer companies paying, 598 n, 598 –599, 599 n homemade, 580 , 581 as income component of returns, 300 investment policy and, 582 no-dividend firms, 284 n, 284 –285 NPV compared to, 281 –282 personal taxes and, 588 , 608 policies regarding ( Dividend policy) on preferred stock, 412 , 471 pros and cons of paying, 600 relevance of, 581 –582 share repurchases as substitutes ( Share repurchases) standard payment method, 575 –578 stock dividends ( Stock dividends) stock splits ( Stock splits) in stock valuation, 268 –269, 269 n substantial, 597 , 597 n, 602 tax disadvantage of, 586 –589 types of payouts, 575 Dividend discount model (DDM), 273 –278, 282 , 292 , 406 –408 application in no-dividend firms, 285 comparison with CAPM, 406 n, 406 –407, 407 n in estimating market risk premium, 396 –397, 397 n growth rate and, 273 –275, 274 n link to cash flows, 277 n, 277 –278, 278 n
Image of page 35
Image of page 36

You've reached the end of your free preview.

Want to read all 336 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes