Corporate Finance, 9th Edition by Ross, Westerfield, Jaffe, Jordan | TEST BANK

Test Bank for Corporate Finance, 9th Canadian Edition, 9ce by Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Roberts TEST BANK ISBN-13: 9781265017545 FULL CHAPTERS INCLUDED Chapter 1: Introduction to Co ...

Test Bank for Corporate Finance, 9th Canadian Edition, 9ce by Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Roberts TEST BANK ISBN-13: 9781265017545 FULL CHAPTERS INCLUDED Chapter 1: Introduction to Corporate Finance Chapter 1 Introduction Introduction to Corporate Finance 1.1 What Is Corporate Finance? The Balance-Sheet Model of the Firm Capital Structure The Financial Manager Identification of Cash Flows Timing of Cash Flows Risk of Cash Flows 1.2 Corporate Securities as Contingent Claims on Total Firm Value 1.3 Business Organization Forms The Sole Proprietorship The Partnership The Corporation The Income Trust 1.4 Goals of the Corporate Firm Agency Costs and the Set-of-Contracts Viewpoint Managerial Goals Separation of Ownership and Control 1.5 Financial Institutions, Financial Markets, and the Corporation Financial Institutions Money Versus Capital Markets Primary Versus Secondary Markets Listing Foreign Exchange Market 1.6 Trends in Financial Markets and Management 1.7 Outline of the Text 1.8 Summary and Conclusions Key Terms Questions & Problems Appendix 1A Questions & Problems Appendix 1B Chapter 2: Accounting Statements and Cash Flow Chapter 2 Introduction 2.1 The Statement of Financial Position Liquidity Debt Versus Equity Value Versus Cost 2.2 Statement of Comprehensive Income International Financial Reporting Standards Non-Cash Items Time and Costs 2.3 Net Working Capital 2.4 Financial Cash Flow 2.5 Summary and Conclusions Key Terms Questions and Problems Minicase Appendix 2A Appendix 2A Appendix 2B Questions & Problems Chapter 3: Financial Planning and Growth Chapter 3 Introduction 3.1 What Is Financial Planning? 3.2 A Financial Planning Model: The Ingredients 3.3 The Percentage of Sales Method The Statement of Comprehensive Income The Statement of Financial Position 3.4 What Determines Growth? Some Caveats on Financial Planning Models 3.5 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 4: Financial Markets and Net Present Value: First Principles of Finance Chapter 4 Introduction Financial Markets and Net Present Value: First Principles of Finance 4.1 The Financial Market Economy The Anonymous Market Market Clearing 4.2 Making Consumption Choices Over Time 4.3 The Competitive Market How Many Interest Rates Are There in a Competitive Market? 4.4 The Basic Principle 4.5 Practising the Principle A Lending Example A Borrowing Example 4.6 Illustrating the Investment Decision 4.7 Corporate Investment Decision Making 4.8 Summary and Conclusions Key Terms Questions & Problems Chapter 5: The Time Value of Money Chapter 5 Introduction 5.1 The One-Period Case 5.2 The Multiperiod Case Future Value and Compounding The Power of Compounding: A Digression Present Value and Discounting Finding the Number of Periods The Algebraic Formula 5.3 Compounding Periods Compounding Over Many Years Continuous Compounding (Advanced) 5.4 Simplifications Perpetuity Growing Perpetuity Annuity Mortgages Using Annuity Formulas Growing Annuity 5.5 What Is a Firm Worth? 5.6 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 5A (online only) Chapter 6: How to Value Bonds and Stocks Chapter 6 Introduction 6.1 Definition and Example of a Bond 6.2 How to Value Bonds Pure Discount Bonds Level-Coupon Bonds Consols 6.3 Bond Concepts Interest Rates and Bond Prices Yield to Maturity Current Yield Holding-Period Return Recent Developments in the Global Bond Market 6.4 The Present Value of Common Stocks Dividends Versus Capital Gains Valuation of Different Types of Stocks 6.5 Estimates of Parameters in the Dividend Discount Model Where Does g Come From? Where Does r Come From? A Healthy Sense of Skepticism 6.6 Growth Opportunities NPVGOs of Real Companies Growth in Earnings and Dividends Versus Growth Opportunities Dividends or Earnings: Which to Discount? The No-Dividend Firm 6.7 The Dividend Growth Model and the NPVGO Model (Advanced) The Dividend Growth Model The NPVGO Model Summary 6.8 Comparables Price–Earnings Ratio 6.9 Valuing the Entire Firm 6.10 Stock Market Reporting 6.11 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 6A Questions & Problems Chapter 7: Net Present Value and Other Investment Rules Chapter 7 Introduction 7.1 Why Use Net Present Value? 7.2 The Payback Period Rule Defining the Rule Problems With the Payback Method Managerial Perspective Summary of Payback 7.3 The Discounted Payback Period Rule 7.4 The Average Accounting Return Defining the Rule Analyzing the Average Accounting Return Method 7.5 The Internal Rate of Return 7.6 Problems With the Internal Rate of Return Approach Definition of Independent and Mutually Exclusive Projects Two General Problems Affecting Both Independent and Mutually Exclusive Projects Problems Specific to Mutually Exclusive Projects Redeeming Qualities of the Internal Rate of Return A Test 7.7 The Profitability Index 7.8 The Practice of Capital Budgeting 7.9 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 8: Net Present Value and Capital Budgeting Chapter 8 Introduction 8.1 Incremental Cash Flows Cash Flows—Not Accounting Income Sunk Costs Opportunity Costs Side Effects Allocated Costs 8.2 The Majestic Mulch and Compost Company: An Example An Analysis of the Project Which Set of Books? A Note on Net Working Capital Interest Expense 8.3 Inflation and Capital Budgeting Interest Rates and Inflation Cash Flow and Inflation Discounting: Nominal or Real? 8.4 Alternative Definitions of Operating Cash Flow The Bottom-Up Approach The Top-Down Approach The Tax Shield Approach Conclusion 8.5 Applying the Tax Shield Approach to the Majestic Mulch and Compost Company Project Present Value of the Tax Shield on Capital Cost Allowance Total Project Cash Flow Versus Tax Shield Approach 8.6 Investments of Unequal Lives: The Equivalent Annual Cost Method The General Decision to Replace (Advanced) 8.7 Summary and Conclusions Key Terms Questions & Problems Minicases Appendix 8A Questions & Problems Appendix 8B Chapter 9: Risk Analysis, Real Options, and Capital Budgeting Chapter 9 Introduction 9.1 Decision Trees 9.2 Sensitivity Analysis, Scenario Analysis, and Break-Even Analysis Sensitivity Analysis and Scenario Analysis Break-Even Analysis Break-Even Analysis, Equivalent Annual Cost, and Capital Cost Allowance 9.3 Monte Carlo Simulation Step 1: Specify the Basic Model Step 2: Specify a Distribution for Each Variable in the Model Step 3: The Computer Draws One Outcome Step 4: Repeat the Procedure Step 5: Calculate Net Present Value 9.4 Real Options The Option to Expand The Option to Abandon Timing Options Real Options in the Real World 9.5 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 10: Risk and Return: Lessons From Market History Chapter 10 Introduction Risk and Return: Lessons From Market History 10.1 Returns Dollar Earnings Percentage Returns or Rate of Return 10.2 Holding-Period Returns 10.3 Return Statistics 10.4 Average Stock Returns and Risk-Free Returns 10.5 Risk Statistics Variance and Standard Deviation Normal Distribution and Its Implications for Standard Deviation Value at Risk Further Perspective on Returns and Risk 10.6 More on Average Returns Arithmetic Versus Geometric Averages Calculating Geometric Average Returns Arithmetic Average Return or Geometric Average Return? 10.7 2008: A Year of Financial Crisis 10.8 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 10A (online only) Chapter 11: Risk and Return: The Capital Asset Pricing Model Chapter 11 Introduction 11.1 Individual Securities 11.2 Expected Return, Variance, and Covariance Expected Return and Variance Covariance and Correlation 11.3 The Risk and Return for Portfolios The Example of Supertech and Slowpoke The Expected Return on a Portfolio Variance and Standard Deviation of a Portfolio 11.4 The Efficient Set for Two Assets Application to International Diversification 11.5 The Efficient Set for Many Securities Variance and Standard Deviation in a Portfolio of Many Assets 11.6 Diversification: An Example Risk and the Sensible Investor 11.7 Risk-Free Borrowing and Lending The Optimal Portfolio 11.8 Market Equilibrium Definition of the Market Equilibrium Portfolio Definition of Risk When Investors Hold the Market Portfolio The Formula for Beta A Test 11.9 Relationship Between Risk and Expected Return (Capital Asset Pricing Model) Expected Return on Market Expected Return on Individual Security 11.10 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 11A (online only) Chapter 12: An Alternative View of Risk and Return: The Arbitrage Pricing Theory Chapter 12 Introduction 12.1 Factor Models: Announcements, Surprises, and Expected Returns 12.2 Risk: Systematic and Unsystematic 12.3 Systematic Risk and Betas 12.4 Portfolios and Factor Models Portfolios and Diversification 12.5 Betas and Expected Returns The Linear Relationship The Market Portfolio and the Single Factor 12.6 The Capital Asset Pricing Model and the Arbitrage Pricing Theory Differences in Pedagogy Differences in Application 12.7 Parametric Approaches to Asset Pricing Empirical Models Style Portfolios 12.8 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 13: Risk, Return, and Capital Budgeting Chapter 13 Introduction 13.1 The Cost of Equity Capital 13.2 Estimation of Beta Beta Estimation in Practice Stability of Beta Using an Industry Beta 13.3 Determinants of Beta Cyclicality of Revenues Operating Leverage Financial Leverage and Beta 13.4 Extensions of the Basic Model The Firm Versus the Project: Vive la différence The Cost of Debt The Cost of Preferred Stock The Weighted Average Cost of Capital The Capital Structure Weights Taxes and the Weighted Average Cost of Capital 13.5 Estimating the Cost of Capital for Suncor Energy 13.6 Flotation Costs and the Weighted Average Cost of Capital The Basic Approach Flotation Costs and Net Present Value Internal Equity and Flotation Costs 13.7 Reducing the Cost of Capital What Is Liquidity? Liquidity, Expected Returns, and the Cost of Capital Liquidity and Adverse Selection What the Corporation Can Do 13.8 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 13A Questions & Problems Chapter 14: Corporate Financing Decisions and Efficient Capital Markets Chapter 14 Introduction Corporate Financing Decisions and Efficient Capital Markets 14.1 Can Financing Decisions Create Value? 14.2 A Description of Efficient Capital Markets Foundations of Market Efficiency 14.3 The Different Types of Efficiency The Weak Form The Semistrong and Strong Forms Some Common Misconceptions About the Efficient Market Hypothesis 14.4 The Evidence The Weak Form The Semistrong Form The Strong Form 14.5 The Behavioural Challenge to Market Efficiency 14.6 Empirical Challenges to Market Efficiency 14.7 Reviewing the Differences 14.8 Implications for Corporate Finance Accounting and Efficient Markets The Timing Decision Speculation and Efficient Markets Information in Market Prices 14.9 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 15: Long-Term Financing: An Introduction Chapter 15 Introduction 15.1 Common Stock Authorized Versus Issued Common Stock Retained Earnings Market Value, Book Value, and Replacement Value Shareholders’ Rights Dividends Classes of Shares 15.2 Corporate Long-Term Debt: The Basics Interest Versus Dividends Is It Debt or Equity? Basic Features of Long-Term Debt Different Types of Debt Repayment Seniority Security Indenture 15.3 Preferred Shares Stated Value Cumulative and Non-Cumulative Dividends Are Preferred Shares Really Debt? Preferred Shares and Taxes Beyond Taxes 15.4 Patterns of Long-Term Financing 15.5 Summary and Conclusions Key Terms Questions & Problems Chapter 16: Capital Structure: Basic Concepts Chapter 16 Introduction 16.1 The Capital Structure Question and the Pie Theory 16.2 Maximizing Firm Value Versus Maximizing Shareholder Interests 16.3 Financial Leverage and Firm Value: An Example Leverage and Returns to Shareholders The Choice Between Debt and Equity A Key Assumption 16.4 Modigliani and Miller: Proposition II (No Taxes) Risk to Equityholders Rises With Leverage Proposition II: Required Return to Equityholders Rises With Leverage Modigliani and Miller: An Interpretation 16.5 Taxes The Basic Insight Taxation of Corporate Income Present Value of the Tax Shield Value of the Levered Firm Expected Return and Leverage Under Corporate Taxes The Weighted Average Cost of Capital and Corporate Taxes Stock Price and Leverage Under Corporate Taxes 16.6 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 17: Capital Structure: Limits to the Use of Debt Chapter 17 Introduction 17.1 Costs of Financial Distress Bankruptcy Risk or Bankruptcy Cost? 17.2 Description of Costs Direct Costs of Financial Distress: Legal and Administrative Costs of Liquidation or Reorganization Indirect Costs of Financial Distress Agency Costs 17.3 Can Debt Costs Be Reduced? Protective Covenants Consolidation of Debt 17.4 Integration of Tax Effects and Financial Distress Costs Pie Again 17.5 Signalling 17.6 Shirking, Perquisites, and Bad Investments: A Note on Agency Cost of Equity Effect of Agency Costs of Equity on Debt-to-Equity Financing Free Cash Flow 17.7 The Pecking-Order Theory Rules of the Pecking Order Implications 17.8 Growth and the Debt-to-Equity Ratio No Growth Growth 17.9 Personal Taxes The Miller Model 17.10 How Firms Establish Capital Structure 17.11 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 17A (online only) Appendix 17B (online only) Questions & Problems Chapter 18: Valuation and Capital Budgeting for the Levered Firm Chapter 18 Introduction 18.1 Adjusted Present Value Approach 18.2 Flow to Equity Approach Step 1: Calculating Levered Cash Flow4 Step 2: Calculating rS Step 3: Valuation 18.3 Weighted Average Cost of Capital Method 18.4 A Comparison of the Adjusted Present Value, Flow to Equity, and Weighted Average Cost of Capital Approaches Caveat: Adjusted Present Value, Flow to Equity, and Weighted Average Cost of Capital Do Not Always Yield the Same Results A Guideline 18.5 Adjusted Present Value Example 18.6 Capital Budgeting When the Discount Rate Must Be Estimated 18.7 Beta and Leverage The Project Is Not Scale Enhancing 18.8 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 18A (online only) Chapter 19: Dividends and Other Payouts Chapter 19 Introduction 19.1 Different Types of Dividends 19.2 Standard Method of Cash Dividend Payment 19.3 The Benchmark Case: An Illustration of the Irrelevance of Dividend Policy Current Policy: Dividends Set Equal to Cash Flow Alternative Policy: Initial Dividend Is Greater Than Cash Flow The Indifference Proposition Homemade Dividends A Test Dividends and Investment Policy 19.4 Repurchase of Stock Dividend Versus Repurchase: Conceptual Example Dividends Versus Repurchases: Real-World Considerations 19.5 Personal Taxes, Issuance Costs, and Dividends Firms Without Sufficient Cash to Pay a Dividend Firms With Sufficient Cash to Pay a Dividend Summary of Personal Taxes 19.6 Real-World Factors Favouring a High-Dividend Policy Desire for Current Income Behavioural Finance Agency Costs Information Content of Dividends and Dividend Signalling 19.7 The Clientele Effect: A Resolution of Real-World Factors? 19.8 What We Know and Do Not Know About Dividend Policy Corporate Dividends Are Substantial Fewer Companies Pay Dividends Corporations Smooth Dividends Some Survey Evidence on Dividends 19.9 Putting It All Together 19.10 Stock Dividends and Stock Splits Some Details on Stock Splits and Stock Dividends Value of Stock Splits and Stock Dividends Reverse Splits 19.11 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 20: Issuing Equity Securities to the Public Chapter 20 Introduction Issuing Equity Securities to the Public 20.1 The Public Issue 20.2 The Basic Procedure for a New Issue The Prompt Offering Prospectus System Alternative Issue Methods 20.3 The Cash Offer Types of Underwriting The Selling Period The Overallotment Option Investment Banks The Offering Price and Underpricing The Decision to Go Public Pricing Initial Public Offerings Underpricing: A Possible Explanation 20.4 The Announcement of New Equity and the Value of the Firm 20.5 The Cost of Issuing Securities The Costs of Going Public: A Case Study 20.6 Rights The Mechanics of a Rights Offering Subscription Price Number of Rights Needed to Purchase a Share The Value of a Right Ex-Rights Value of Rights After Ex-Rights Date The Underwriting Arrangements Effects on Shareholders Cost of Rights Offerings 20.7 The Private Equity Market Private Placement The Private Equity Firm Venture Capital Suppliers of Venture Capital Stages of Financing Some Venture Capital Realities 20.8 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 21: Long-Term Debt Chapter 21 Introduction 21.1 Long-Term Debt: A Review 21.2 The Public Issue of Bonds The Basic Terms Security Seniority Protective Covenants The Sinking Fund The Call Provision 21.3 Bond Refunding Should Firms Issue Callable Bonds? Calling Bonds: When Does It Make Sense? 21.4 Bond Ratings Junk Bonds 21.5 Some Different Types of Bonds Zero-Coupon Bonds Floating-Rate Bonds Financial Engineering and Bonds 21.6 Direct Placement Compared to Public Issues 21.7 Long-Term Syndicated Bank Loans 21.8 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 22: Leasing Chapter 22 Introduction 22.1 Types of Leases The Basics Operating Leases Financial Leases 22.2 Accounting and Leasing 22.3 Taxes and Leases 22.4 The Cash Flows of Financial Leasing The Incremental Cash Flows 22.5 A Detour on Discounting and Debt Capacity With Corporate Taxes Present Value of Risk-Free Cash Flows Optimal Debt Level and Risk-Free Cash Flows (Advanced) 22.6 Net Present Value Analysis of the Lease-Versus-Buy Decision The Discount Rate Asset Pool and Salvage Value 22.7 Debt Displacement and Lease Valuation The Basic Concept of Debt Displacement (Advanced) Optimal Debt Level in the TransCanada Taxis Example (Advanced) 22.8 Does Leasing Ever Pay? TheBase Case 22.9 Reasons for Leasing Good Reasons for Leasing Bad Reasons for Leasing Leasing Decisions in Practice 22.10 Some Unanswered Questions Are the Uses of Leases and of Debt Complementary? Why Are Leases Offered by Both Manufacturers and Third-Party Lessors? Why Are Some Assets Leased More Commonly Than Others? 22.11 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 22A (online only) Questions & Problems Chapter 23: Options and Corporate Finance: Basic Concepts Chapter 23 Introduction Options and Corporate Finance: Basic Concepts 23.1 Options 23.2 Call Options The Value of a Call Option at Expiration 23.3 Put Options The Value of a Put Option at Expiration 23.4 Selling Options 23.5 Stock Option Quotations Long-Term Equity Anticipation Securities 23.6 Combinations of Options 23.7 Valuing Options Bounding the Value of an American Call The Factors Determining Call Option Values A Quick Discussion of Factors Determining Put Option Values 23.8 An Option Pricing Formula A Two-State Option Model The Black–Scholes Model 23.9 Stocks and Bonds as Options The Firm Expressed in Terms of Call Options The Firm Expressed in Terms of Put Options A Resolution of the Two Views A Note on Loan Guarantees 23.10 Investment in Real Projects and Options 23.11 Contingent Value Rights, Mergers, and Corporate Decisions 23.12 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 24: Options and Corporate Finance: Extensions and Applications Chapter 24 Introduction 24.1 Executive Stock Options Why Options? Executive Compensation: Where Are We Now? Valuing Executive Compensation 24.2 Valuing a Start-Up 24.3 More About the Binomial Model Heating Oil 24.4 Shutdown and Reopening Decisions Valuing a Gold Mine The Abandonment and Opening Decisions Valuing the Simple Gold Mine 24.5 Summary and Conclusions Questions & Problems Minicase Chapter 25: Warrants and Convertibles Chapter 25 Introduction 25.1 Warrants 25.2 The Difference Between Warrants and Call Options How the Firm Can Hurt Warrant Holders 25.3 Warrant Pricing and the Black–Scholes Model (Advanced) 25.4 Convertible Bonds 25.5 The Value of Convertible Bonds Straight Bond Value Conversion Value Option Value 25.6 Reasons for Issuing Warrants and Convertibles Convertible Debt Versus Straight Debt Convertible Debt Versus Common Stock The “Free Lunch” Story The “Expensive Lunch” Story A Reconciliation 25.7 Why Are Warrants and Convertibles Issued? Matching Cash Flows Risk Synergy Agency Costs Backdoor Equity 25.8 Conversion Policy 25.9 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 26: Derivatives and Hedging Risk Chapter 26 Introduction 26.1 Derivatives, Hedging, and Risk The Impact of Financial Risk: The Credit Crisis of 2007–09 26.2 Forward Contracts 26.3 Futures Contracts 26.4 Hedging Hedging With Futures Versus Hedging With Options 26.5 Interest Rate Futures Contracts Pricing of Government of Canada Bonds Pricing of Forward Contracts Futures Contracts Hedging in Interest Rate Futures 26.6 Duration Hedging The Case of Zero-Coupon Bonds The Case of Two Bonds With the Same Maturity but With Different Coupons Duration Matching Liabilities With Assets Duration in Practice 26.7 Swap Contracts Interest Rate Swaps Currency Swaps Credit Default Swaps Exotics Movement Toward Exchange Trading for Swaps 26.8 Actual Use of Derivatives 26.9 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 27: Short-Term Finance and Planning Chapter 27 Introduction Short-Term Finance and Planning 27.1 Tracing Cash and Net Working Capital 27.2 Defining Cash in Terms of Other Elements The Sources and Uses of Cash Statement 27.3 The Operating Cycle and the Cash Cycle Interpreting the Cash Cycle 27.4 Some Aspects of Short-Term Financial Policy The Size of the Firm’s Investment in Current Assets Alternative Financing Policies for Current Assets Current Assets and Liabilities in Practice 27.5 Cash Budgeting Cash Outflow The Cash Balance 27.6 The Short-Term Financial Plan Short-Term Planning and Risk Short-Term Borrowing In the Absence of Short-Term Borrowing 27.7 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 28: Cash Management Chapter 28 Introduction 28.1 Reasons for Holding Cash The Speculative and Precautionary Motives The Transaction Motive Costs of Holding Cash Cash Management Versus Liquidity Management 28.2 Managing the Collection and Disbursement of Cash Electronic Data Interchange: The End of Float? Accelerating Collections Controlling Disbursements Ethical and Legal Questions 28.3 Investing Idle Cash Seasonal or Cyclical Activities Planned Expenditures Characteristics of Short-Term Securities Some Different Types of Money Market Securities 28.4 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 29: Credit Management Chapter 29 Introduction 29.1 Terms of the Sale Why Trade Credit Exists The Basic Form Credit Period Cash Discounts Credit Instruments 29.2 The Decision to Grant Credit: Risk and Information The Value of New Information About Credit Risk Future Sales 29.3 Optimal Credit Policy Credit Insurance 29.4 Credit Analysis Credit Information Credit Evaluation and Scoring 29.5 Collection Policy Average Collection Period Aging Schedule Collection Effort 29.6 Other Aspects of Credit Policy Factoring How to Finance Trade Credit 29.7 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 29A (online only) 29A.1 Inventory Management Techniques The ABC Approach The Economic Order Quantity Model Extensions to the Economic Order Quantity Model Managing Derived-Demand Inventories Key Terms Questions & Problems Chapter 30: Mergers and Acquisitions Chapter 30 Introduction Mergers and Acquisitions 30.1 The Basic Forms of Acquisitions Merger or Consolidation Acquisition of Stock Acquisition of Assets A Classification Scheme A Note on Takeovers 30.2 The Tax Forms of Acquisitions Determinants of Tax Status Taxable Versus Tax-Free Acquisitions 30.3 Accounting for Acquisitions The Acquisition Method 30.4 Determining the Synergy From an Acquisition 30.5 Sources of Synergy From Acquisitions Revenue Enhancement Cost Reduction Tax Gains Lower Cost of Capital 30.6 Calculating the Value of the Firm After an Acquisition Avoiding Mistakes 30.7 A Cost to Shareholders From Reduction in Risk The Base Case The Case Where One Firm Has Debt How Can Shareholders Reduce Their Losses From the Coinsurance Effect? 30.8 Two “Bad” Reasons for Mergers Earnings Growth Diversification 30.9 The Net Present Value of a Merger Cash Common Stock Cash Versus Common Stock Defensive Tactics Divestitures The Control Block and the Corporate Charter Standstill Agreements Exclusionary Offers and Non-Voting Stock Going Private and Leveraged Buyouts Other Defensive Devices 30.10 Some Evidence on Acquisitions Do Acquisitions Benefit Shareholders? The Managers Versus the Shareholders Real Productivity 30.11 Summary and Conclusions Key Terms Questions & Problems Minicase Chapter 31: Financial Distress Chapter 31 Introduction 31.1 What Is Financial Distress? 31.2 What Happens in Financial Distress? 31.3 Bankruptcy Liquidation and Reorganization Bankruptcy Liquidation Bankruptcy Reorganization Agreements to Avoid Bankruptcy 31.4 Current Issues in Financial Distress Private Workout or Bankruptcy: Which Is Better? Holdouts Complexity Lack of Information Prepackaged Bankruptcy 31.5 The Decision to Seek Court Protection: The Case of Canwest Global Communications Corporation 31.6 Summary and Conclusions Key Terms Questions & Problems Minicase Appendix 31A (online only) Chapter 32: International Corporate Finance Chapter 32 Introduction 32.1 Terminology 32.2 Foreign Exchange Markets and Exchange Rates Exchange Rates Types of Transactions 32.3 The Law of One Price and Purchasing Power Parity 32.4 Interest Rates and Exchange Rates The Dollar Investment The Euro Investment The Forward Discount and Expected Spot Rates Exchange Rate Risk More Advanced Short-Term Hedges The Hedging Decision in Practice 32.5 International Capital Budgeting Foreign Exchange Conversion Unremitted Cash Flows The Cost of Capital for International Firms 32.6 International Financing Decisions Short-Term and Medium-Term Financing International Bond Markets 32.7 Reporting Foreign Operations 32.8 Political Risk 32.9 Summary and Conclusions