Test Bank for Financial Management Theory & Practice, 16th Edition by Brigham and Ehrhardt

Test Bank for Financial Management Theory & Practice, 16th Edition, 10e by Eugene F. Brigham, Michael C. Ehrhardt TEST BANK ISBN-13: 9781337902601 Full chapters included Part 1: The Company and Its Environment Chap ...

Test Bank for Financial Management Theory & Practice, 16th Edition, 10e by Eugene F. Brigham, Michael C. Ehrhardt TEST BANK ISBN-13: 9781337902601 Full chapters included Part 1: The Company and Its Environment Chapter 1: An Overview of Financial Management and the Financial Environment 1-1 The Five-Minute MBA 1-2 Finance from 40,000 Feet Above 1-3 The Corporate Life Cycle 1-4 Governing a Corporation 1-5 An Overview of Financial Markets 1-6 Claims on Future Cash Flows: Types of Financial Securities 1-7 Claims on Future Cash Flows: The Required Rate of Return (the Cost of Money) 1-8 The Functions of Financial Institutions 1-9 Financial Markets 1-10 Overview of the U.S. Stock Markets 1-11 Trading in the Modern Stock Markets 1-12 Finance and the Great Recession of 2007 1-13 The Big Picture e-Resources Summary Chapter 2: Financial Statements, Cash Flow, and Taxes 2-1 Financial Statements and Reports 2-2 The Balance Sheet 2-3 The Income Statement 2-4 Statement of Stockholders' Equity 2-5 Statement of Cash Flows 2-6 Net Cash Flow 2-7 Free Cash Flow: The Cash Flow Available for Distribution to Investors 2-8 Performance Evaluation 2-9 Corporate Income Taxes 2-10 Personal Taxes Summary Chapter 3: Analysis of Financial Statements 3-1 Financial Analysis 3-2 Profitability Ratios 3-3 Asset Management Ratios 3-4 Liquidity Ratios 3-5 Debt Management Ratios 3-6 Market Value Ratios 3-7 Trend Analysis, Common Size Analysis, and Percentage Change Analysis 3-8 Tying the Ratios Together: The DuPont Equation 3-9 Comparative Ratios and Benchmarking 3-10 Uses and Limitations of Ratio Analysis 3-11 Looking beyond the Numbers Summary Part 2: Fixed Income Securities Chapter 4: Time Value of Money 4-1 Time Lines 4-2 Future Values 4-3 Present Values 4-4 Finding the Interest Rate, I 4-5 Finding the Number of Years, N 4-6 Perpetuities 4-7 Annuities 4-8 Future Value of an Ordinary Annuity 4-9 Future Value of an Annuity Due 4-10 Present Value of Ordinary Annuities and Annuities Due 4-11 Finding Annuity Payments, Periods, and Interest Rates 4-12 Uneven, or Irregular, Cash Flows 4-13 Future Value of an Uneven Cash Flow Stream 4-14 Solving for I with Irregular Cash Flows 4-15 Semiannual and Other Compounding Periods 4-16 Fractional Time Periods 4-17 Amortized Loans 4-18 Growing Annuities Summary Chapter 5: Bonds, Bond Valuation, and Interest Rates 5-1 Who Issues Bonds? 5-2 Key Characteristics of Bonds 5-3 Bond Valuation 5-4 Changes in Bond Values over Time 5-5 Bonds with Semiannual Coupons 5-6 Bond Yields 5-7 The Pre-Tax Cost of Debt: Determinants of Market Interest Rates 5-8 The Risk-Free Interest Rate: Nominal (rRF) and Real (r*) 5-9 The Inflation Premium (IP) 5-10 The Maturity Risk Premium (MRP) 5-11 The Default Risk Premium (DRP) 5-12 The Liquidity Premium (LP) 5-13 The Term Structure of Interest Rates 5-14 Financing with Junk Bonds 5-15 Bankruptcy and Reorganization Summary Part 3: Stocks and Options Chapter 6: Risk and Return 6-1 Investment Returns and Risk 6-2 Measuring Risk for Discrete Distributions 6-3 Risk in a Continuous Distribution 6-4 Using Historical Data to Estimate Risk 6-5 Risk in a Portfolio Context 6-6 The Relevant Risk of a Stock: The Capital Asset Pricing Model (CAPM) 6-7 The Relationship between Risk and Return in the Capital Asset Pricing Model 6-8 The Efficient Markets Hypothesis 6-9 The Fama-French Three-Factor Model 6-10 Behavioral Finance 6-11 The CAPM and Market Efficiency: Implications for Corporate Managers and Investors Summary Chapter 7: Corporate Valuation and Stock Valuation 7-1 Legal Rights and Privileges of Common Stockholders 7-2 Classified Stock and Tracking Stock 7-3 Stock Market Reporting 7-4 Valuing Common Stocks - Introducing the Free Cash Flow (FCF) Valuation Model 7-5 The Constant Growth Model: Valuation When Expected Free Cash Flow Grows at a Constant Rate 7-6 The Multistage Model: Valuation When Expected Short-Term Free Cash Flow Grows at a Nonconstant R 7-7 Application of the FCF Valuation Model to MicroDrive 7-8 Do Stock Values Reflect Long-Term or Short-Term Cash Flows? 7-9 Value-Based Management: Using the Free Cash Flow Valuation Model to Identify Value Drivers 7-10 Why Are Stock Prices So Volatile? 7-11 Dividend Valuation Models 7-12 The Market Multiple Method 7-13 Comparing the FCF Valuation Model, the Dividend Growth Model, and the Market Multiple Method 7-14 Preferred Stock Summary Chapter 8: Financial Options and Applications in Corporate Finance 8-1 Overview of Financial Options 8-2 The Single-Period Binomial Option Pricing Approach 8-3 The Single-Period Binomial Option Pricing Formula 8-4 The Multi-Period Binomial Option Pricing Model 8-5 The Black-Scholes Option Pricing Model (OPM) 8-6 The Valuation of Put Options 8-7 A pplications of Option Pricing in Corporate Finance Summary Part 4: Projects and Their Valuation Chapter 9: The Cost of Capital 9-1 The Weighted Average Cost of Capital 9-2 Choosing Weights for the Weighted Average Cost of Capital 9-3 The Cost of Debt 9-4 Cost of Preferred Stock, rps 9-6 Using the CAPM to Estimate the Costof Common Stock, rs 9-7 Using the Dividend Growth Approach to Estimate the Cost of Common Stock 9-8 The Weighted Average Cost of Capital (WACC) 9-9 Adjusting the Cost of Equity for Flotation Costs 9-10 Privately Owned Firms and Small Businesses 9-11 The Divisional Cost of Capital 9-12 Estimating the Cost of Capital for Individual Projects 9-13 Managerial Issues and the Cost of Capital Summary Chapter 10: The Basics of Capital Budgeting: Evaluating Cash Flows 10-1 An Overview of Capital Budgeting 10-2 The First Step in Project Analysis 10-3 Net Present Value (NPV) 10-4 Internal Rate of Return (IRR) 10-5 Modified Internal Rate of Return (MIRR) 10-6 Profitability Index (PI) 10-7 Payback Period 10-8 How to Use the Different Capital Budgeting Methods 10-9 Other Issues in Capital Budgeting Summary Chapter 11: Cash Flow Estimation and Risk Analysis 11-1 Identifying Relevant Cash Flows 11-2 Analysis of an Expansion Project 11-3 Risk Analysis in Capital Budgeting 11-4 Measuring Stand-Alone Risk 11-5 Sensitivity Analysis 11-6 Scenario Analysis 11-7 Monte Carlo Simulation Analysis 11-8 Project Risk Conclusions 11-9 Replacement Analysis 11-10 Phased Decisions and Decision Trees 11-11 Other Real Options Summary Appendix 11A: Depreciation for Tax Purposes Part 5: Corporate Valuation and Governance Chapter 12: Corporate Valuation and Financial Planning 12-1 Overview of Financial Planning 12-2 Financial Planning at MicroDrive Inc. 12-3 Forecasting Operations 12-4 Evaluating MicroDrive's Strategic Initiatives 12-5 Projecting MicroDrive's Financial Statements 12-6 Analysis and Selection of a Strategic Plan 12-7 The CFO's Model 12-8 Additional Funds Needed (AFN) Equation 12-9 Forecasting When the Ratios Change Summary Chapter 13: Corporate Governance 13-1 Agency Conflicts 13-2 Corporate Governance 13-3 Employee Stock Ownership Plans (ESOPs) Summary Part 6: Cash Distributions and Capital Structure Chapter 14: Distributions to Shareholders: Dividends and Repurchases 14-1 An Overview of Cash Distributions 14-2 Procedures for Cash Distributions 14-3 Cash Distributions and Firm Value 14-4 Clientele Effect 14-5 Signaling Hypothesis 14-6 Implications for Dividend Stability 14-7 Setting the Target Distribution Level: The Residual Distribution Model 14-8 The Residual Distribution Model in Practice 14-9 A Tale of Two Cash Distributions: Dividends versus Stock Repurchases 14-10 The Pros and Cons of Dividends and Repurchases 14-11 Other Factors Influencing Distributions 14-12 Summarizing the Distribution Policy Decision 14-13 Stock Splits and Stock Dividends 14-14 Dividend Reinvestment Plans Summary Chapter 15: Capital Structure Decisions 15-1 An Overview of Capital Structure 15-2 Business Risk and Financial Risk 15-3 Capital Structure Theory: The Modigliani and Miller Models 15-4 Capital Structure Theory: Beyond the Modigliani and Miller Models 15-5 Capital Structure Evidence and Implications 15-6 Estimating the Optimal Capital Structure 15-7 Anatomy of a Recapitalization 15-8 Risky Debt and Equity as an Option 15-9 Managing the Maturity Structure of Debt Summary Part 7: Managing Global Operations Chapter 16: Supply Chains and Working Capital Management 16-1 Overview of Supply Chain Management 16-2 Using and Financing Operating Current Assets 16-3 The Cash Conversion Cycle 16-4 Inventory Management 16-5 Receivables Management 16-6 Accruals and Accounts Payable (Trade Credit) 16-7 The Cash Budget 16-8 Cash Management and the Target Cash Balance 16-9 Cash Management Techniques 16-10 Managing Short-Term Investments 16-11 Short-Term Bank Loans 16-12 Commercial Paper 16-13 Use of Security in Short-Term Financing Summary Chapter 17: Multinational Financial Management 17-1 Multinational, or Global, Corporations 17-2 Multinational versus Domestic Financial Management 17-3 Exchange Rates 17-4 The Fixed Exchange Rate System 17-5 Floating Exchange Rates 17-6 Government Intervention in Foreign Exchange Markets 17-7 Other Exchange Rate Systems: No Local Currency, Pegged Rates, and Managed Floating Rates 17-8 Forward Exchange Rates and Risk Management 17-9 Interest Rate Parity 17-10 Purchasing Power Parity 17-11 Inflation, Interest Rates, and Exchange Rates 17-12 International Money and Capital Markets 17-13 Multinational Capital Budgeting 17-14 International Capital Structures 17-15 Multinational Working Capital Management Summary Part 8: Tactical Financing Decisions Chapter 18: Public and Private Financing: Initial Offerings, Seasoned Offerings, Investment Banks 18-1 The Financial Life Cycle of a Start-Up Company 18-2 The Decision to Go Public 18-3 The Process of Going Public: An Initial Public Offering 18-4 Equity Carve-Outs: A Special Type of IPO 18-5 Other Ways to Raise Funds in the Capital Markets 18-6 Investment Banking Activities 18-7 The Decision to Go Private Summary Chapter 19: Lease Financing 19-1 Types of Leases 19-2 Reporting Leases on Financial Statements 19-3 Lease Analysis: Determination of Tax Status by the Internal Revenue Service (IRS) 19-4 Lease Analysis: Non-Tax-Oriented Leases 19-5 Lease Analysis: Tax-Oriented Lease 19-6 Evaluation by the Lessor 19-7 Leases, Taxes, and the 2017 Tax Cuts and Jobs Act 19-8 Other Issues in Lease Analysis 19-9 Other Reasons for Leasing Summary Chapter 20: Hybrid Financing: Preferred Stock, Warrants, and Convertibles 20-1 Preferred Stock 20-2 Warrants 20-3 Convertible Securities 20-4 A Final Comparison of Warrants and Convertibles 20-5 Reporting Earnings When Warrants or Convertibles Are Outstanding Summary Part 9: Strategic Finance in a Dynamic Environment Chapter 21: Dynamic Capital Structures and Corporate Valuation 21-1 The Adjusted Present Value (APV) Approach 21-2 The Modigliani and Miller Models 21-3 The Compressed Adjusted Present Value (CAPV) Model 21-4 The Free Cash Flow to Equity (FCFE) Model 21-5 Multistage Valuation When the Capital Structure Is Stable 21-6 Illustration of the Three Valuation Approaches for a Constant Capital Structure 21-7 Analysis of a Dynamic Capital Structure Summary Chapter 22: Mergers and Corporate Control 22-1 Rationale for Mergers 22-2 Types of Mergers: Business Types, Acquisition Methods, and Hidden Liabilities 22-3 Level of Merger Activity 22-4 Hostile versus Friendly Takeovers 22-5 Merger Regulation 22-6 Overview of Merger Analysis 22-7 Estimating a Target's Value 22-8 Setting the Bid Price 22-9 Who Wins: The Empirical Evidence 22-10 The Role of Investment Bankers 22-11 Other Business Combinations 22-12 Divestitures 22-13 Merger Tax Treatments 22-14 Financial Reporting for Mergers Summary Chapter 23: Enterprise Risk Management 23-1 Reasons to Manage Risk 23-2 An Overview of Enterprise Risk Management 23-3 A Framework for Enterprise Risk Management 23-4 Categories of Risk Events 23-5 Foreign Exchange (FX) Risk 23-6 Commodity Price Risk 23-7 Interest Rate Risk 23-8 Project Selection Risks 23-9 Managing Credit Risks 23-10 Risk and Human Safety Summary Chapter 24: Bankruptcy, Reorganization, and Liquidation 24-1 Financial Distress and Its Consequences 24-2 Issues Facing a Firm in Financial Distress 24-3 Settlements without Going through Formal Bankruptcy 24-4 Federal Bankruptcy Law 24-5 Reorganization in Bankruptcy (Chapter 11 of Bankruptcy Code) 24-6 Liquidation in Bankruptcy 24-7 Anatomy of a Bankruptcy: Transforming the GM Corporation into the GM Company 24-8 Other Motivations for Bankruptcy 24-9 Some Criticisms of Bankruptcy Laws Summary Part 10: Special Topics Chapter 25: Portfolio Theory and Asset Pricing Models 25-1 Efficient Portfolios 25-2 Choosing the Optimal Portfolio 25-3 The Basic Assumptions of the Capital Asset Pricing Model 25-4 The Capital Market Line and the Security Market Line 25-5 Calculating Beta Coefficients 25-6 Empirical Tests of the CAPM 25-7 Arbitrage Pricing Theory Summary Chapter 26: Real Options 26-1 Valuing Real Options 26-2 The Investment Timing Option: An Illustration 26-3 The Growth Option: An Illustration 26-4 Concluding Thoughts on Real Options