Corporate Finance. Summary of "Principles of Corporate Finance" by Brealey et al.(11th edition)"

Preparación para Exámenes , 2012 , 9 Páginas

Economía de las empresas - Inversiones y finanzas

This summary contains a list of the most important points mentioned in "Principles of Corporate Finance" by Brealey et al. (11th edition).

Inhaltsverzeichnis

• Chapter 1 (General Overview)
• Chapter 2 (How to calculate present values)
• Chapter 3 (Valuing bonds)
• Chapter 4 (Value of common stocks)
• Chapter 5 (NPV and other investment criteria)
• Chapter 6 (Investment decisions with the NPV rule)
• Chapter 7 (Introduction to risk and return)
• Chapter 8 (Portfolio theory & capital asset pricing model)
• Chapter 9 (Risk and cost of capital)
• Chapter 10 (Efficient markets and behavioral finance)

Zielsetzung und Themenschwerpunkte

This text provides a comprehensive overview of corporate finance, covering key concepts, tools, and applications. It aims to equip readers with a solid understanding of financial decision-making in business enterprises.

• Present Value and Discounting
• Valuation of Bonds and Stocks
• Investment Decisions and Capital Budgeting
• Risk and Return
• Efficient Markets and Behavioral Finance

Zusammenfassung der Kapitel

Chapter 1 (General Overview): This chapter introduces the fundamental concepts of corporate finance, including the role of financial managers, the importance of financial decisions, and the key principles that guide these decisions. It also discusses agency problems and the concept of the hurdle rate, which are crucial for understanding the decision-making process in corporations.

Chapter 2 (How to calculate present values): This chapter delves into the concept of present value, a fundamental tool in corporate finance. It explains how to calculate present values for various cash flows, including perpetuities and annuities. The chapter also covers the difference between effective annual interest rate (EAR) and annual percentage rate (APR), providing a clear understanding of how interest rates are calculated and applied.

Chapter 3 (Valuing bonds): This chapter focuses on the valuation of bonds, a key type of debt instrument. It explains how to calculate the present value of a bond, considering its coupon rate, yield to maturity, and time to maturity. The chapter also discusses the relationship between spot rates, forward rates, and future rates, providing a comprehensive understanding of the bond market.

Chapter 4 (Value of common stocks): This chapter explores the valuation of common stocks, a key type of equity instrument. It explains how to calculate the present value of a stock, considering its dividends, growth rate, and risk. The chapter also discusses the relationship between book value and market value, providing a clear understanding of how stock prices are determined.

Chapter 5 (NPV and other investment criteria): This chapter introduces the concept of net present value (NPV), a widely used investment evaluation technique. It explains how to calculate NPV and how it can be used to make investment decisions. The chapter also discusses other investment criteria, such as internal rate of return (IRR), payback period, and profitability index, providing a comprehensive overview of investment evaluation methods.

Chapter 6 (Investment decisions with the NPV rule): This chapter delves into the practical application of the NPV rule in investment decision-making. It discusses the concept of working capital and horizon value, which are crucial for understanding the long-term implications of investment decisions. The chapter also explores the concept of capital rationing, which is a common constraint faced by businesses when making investment decisions.

Chapter 7 (Introduction to risk and return): This chapter introduces the concepts of risk and return, which are fundamental to understanding investment decisions. It explains how to measure risk and return, and how they are related. The chapter also discusses the concept of market premium, which is the additional return investors expect for taking on market risk.

Chapter 8 (Portfolio theory & capital asset pricing model): This chapter explores the concept of portfolio theory, which is a framework for understanding how to diversify investments to reduce risk. It explains how to construct efficient portfolios and how to use the capital asset pricing model (CAPM) to calculate the expected return on an investment, given its risk.

Chapter 9 (Risk and cost of capital): This chapter focuses on the concept of cost of capital, which is the minimum return a company must earn on its investments to satisfy its investors. It explains how to calculate the weighted average cost of capital (WACC) and how it can be used to make investment decisions. The chapter also discusses the concept of certainty equivalent, which is a way to adjust for risk when making investment decisions.

Schlüsselwörter

The key terms and focus themes of this text include present value, discounting, bond valuation, stock valuation, investment decisions, capital budgeting, risk, return, portfolio theory, capital asset pricing model, cost of capital, efficient markets, and behavioral finance. The text explores these concepts in detail, providing a comprehensive understanding of corporate finance and its practical applications.

• Universidad: Stralsund University of Applied Sciences
• Autor: Laura Herrmann (Autor)
• Año de publicación: 2012
• Páginas: 9
• No. de catálogo: V277872
• ISBN (Ebook): 9783656705796
• ISBN (Libro): 9783656707257
• Idioma: Inglés
• Etiqueta: summary, corporate, finance