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Summary of Notation - Financial Management
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Job SearchBefore beginning the discussion of the cost of capital, it is helpful to summarize the important elements of notation used throughout this chapter.
rf = riskless (risk-free) rate of return; the return offered on short-term U.S. Treasury securities
kd = pretax cost of debt
ki = after-tax cost of debt
kp = cost of preferred stock
ke = cost of internal common equity
k_e = cost of external common equity
ka = weighted (marginal) cost of capital
P0 = the current market price of a security
Pnet = the net proceeds to the firm from the sale of a security
Pf = market value of a firm’s preferred stock
E = market value of a firm’s common equity
B = market value of a firm’s debt in its capital structure
rm = expected return on the “market” portfolio
b = the beta (systematic risk) of a company’s stock
Financial Management Related Interview Questions |
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| Financial Planning Interview Questions | Financial Accounting Interview Questions |
| Cost Accounting Interview Questions | Management Accounting Interview Questions |
| Financial Statement Interview Questions | Corporate Finance Interview Questions |
| Financial Analyst Interview Questions | Financial Services Interview Questions |
Financial Management Related Practice Tests |
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|---|---|
| Financial Planning Practice Tests | Financial Accounting Practice Tests |
| Cost Accounting Practice Tests | Management Accounting Practice Tests |
| Financial Statement Practice Tests |
Financial Management Tutorial
- The Role And Objective Of Financial Management Introduction
- Forms Of Business Organization
- Maximizing Shareholder Wealth As The Primary Goal
- Maximization Of Shareholder Wealth: Managerial Strategies
- Cash Flow
- Net Present Value Rule
- Organization Of The Financial Management Function
- Financial Management And Other Disciplines
- Career Opportunities In Finance
- Professional Finance Affiliations
- Organization Of The Text
- The Domestic And International Financial Marketplace Introduction
- Income Taxes And Financial Management
- An Overview Of The U.s. Financial System
- The Structure And Operation Of U.s. Security Markets
- The Global Economy And Multinational Enterprises
- Foreign Currency Markets And Exchange Rates
- Market Efficiency
- Holding Period Returns
- Evaluation Of Financial Performance Introduction
- Uses Of Financial Analysis
- Interpreting Financial Ratios
- Basic Classifications Of Financial Ratios
- Summary Of Financial Ratio Analysis
- Trend Analysis
- Analysis Of Profitability: Return On Investment
- Analyzing Profitability Through Return On Stockholders’ Equity
- Sources Of Comparative Financial Data
- A Word Of Caution About Financial Ratio Analysis
- Earnings And Balance Sheet Quality And Financial Analysis
- Market Value Added:an Alternative Measure Of Performance
- Inflation And Financial Statement Analysis
- Financial Planning And Forecasting Introduction
- Financial Planning
- Cash Flow Analysis Concept
- Financial Forecasting
- The Time Value Of Money Introduction
- The Use Of Financial Calculators And Spreadsheets
- Interest
- Simple Interest
- Compound Interest And Future Value
- Present Value
- Annuities
- Present Value: Some Additional Cash Flow Patterns
- Compounding Periods And Effective Interest Rates
- Solving The Financial Challenge
- Risk And Return On At And T Common Stock Introduction
- Meaning And Measurement Of Risk
- Relationship Between Risk And Return
- Investment Diversification And Portfolio Risk Analysis
- Portfolio Risk And The Capital Asset Pricing Model
- Other Dimensions Of Risk
- Fixed-income Securities Introduction
- Characteristics Of Long-term Debt
- Bond Valuation
- Characteristics Of Preferred Stock
- Valuation Of Preferred Stock
- Common Stock Introduction
- Characteristics Of Common Stock
- The Security Offering Process: Role Of The Investment Banker
- Valuation Of Common Stock
- Applications Of The General Dividend Valuation Model
- Capital Budgeting And Cash Flow Analysis Introduction
- Key Terms And Concepts In Capital Budgeting
- Basic Framework For Capital Budgeting
- Generating Capital Investment Project Proposals
- Principles Of Estimating Cash Flows
- Net Investment (ninv)
- Net (operating) Cash Flows
- Asset Expansion Projects
- Asset Replacement Projects
- Problems In Cash Flow Estimation
- The Practice Of Cash Flow Estimation For Capital Budgeting
- Capital Budgeting Decision Criteria And Real Option Considerations Introduction
- Decision Models For Evaluating Alternatives
- Capital Rationing And The Capital Budgeting Decision
- Reviewing And Post-auditing An Accepted Project
- A Comprehensive Example Of Capital Budgeting: Opening A New Bank Branch
- Inflation And Capital Expenditures
- Real Options In Capital Budgeting16
- Capital Budgeting And Risk Introduction
- Total Project Risk Versus Portfolio Risk
- Adjusting For Total Project Risk
- Adjusting For Beta Risk In Capital Budgeting
- The Cost Of Capital Introduction
- Summary of Notation
- Weighted Cost Of Capital
- Relative Costs Of Capital
- Computing The Component Costs Of Capital
- Divisional Costs Of Capital
- Determining The Weighted (marginal) Cost Of Capital Schedule
- Determining The Optimal Capital Budget
- Cost Of Depreciation-generated Funds
- Capital Structure Concepts Introduction
- Capital Structure Decisions And Maximization Of Shareholder Wealth
- Business Risk
- Financial Risk And Financial Leverage
- Capital Structure Theory
- Capital Structure Management In Practice Introduction
- Operating And Financial Leverage
- Other Financial Risk Measures
- Ebit-eps Analysis
- Cash Insolvency Analysis
- Other Factors To Consider In Making Capital Structure Decisions
- Dividend Policy Introduction
- Determinants Of Dividend Policy
- Dividend Policy And Firm Value
- Dividend Policies
- How Dividends Are Paid
- Stock Dividends And Stock Splits
- Share Repurchases As Dividend Decisions
- Management Of Working Capital
- Working Capital Policy
- Levels Of Working Capital Investment
- Proportions Of Short-term And Long-term Financing
- Overall Working Capital Policy
- Short-term Credit
- Cost Of Short-term Funds
- Trade Credit
- Accrued Expenses And Deferred Income
- Short-term Bank Credit
- Commercial Paper
- Accounts Receivable Loans
- Inventory Loans
- The Management Of Cash And Marketable Securities Introduction
- Liquid Asset Balance
- Controlling The Collection And Disbursement Of Cash
- Electronic Funds Transfer
- Investing In Marketable Securities
- Management Of Accounts Receivable And Inventories Introduction
- Accounts Receivable Management
- Evaluating Individual Credit Applicants
- Inventory Management
- Inventory Control Models
- Lease And Intermediate Term Financing Introduction
- Leasing
- Types Of Leases
- Advantages And Disadvantages Of Leasing
- Tax And Accounting Aspects Of Leases
- Determining Lease Payments:the Lessor’s Perspective
- Lease–buy Analysis: The Lessee’s Perspective
- Term Loans
- Security Provisions And Protective Covenants
- Suppliers Of Term Loans
- Equipment Loans
- Financing With Derivatives Introduction
- Option Valuation Concepts
- Convertible Securities
- Features Of Warrants
- Analysis Of Rights Offerings
- Interest Rate Swaps
- Risk Management Introduction
- Why Manage Risk?
- Nonhedging Risk Management Strategies
- Hedging Strategies For Risk Management
- Hedging Price Risk With Options
- International Financial Management Introduction
- Factors That Affect Exchange Rates
- Forecasting Future Exchange Rates
- Foreign Exchange Risk
- Corporate Restructuring Introduction
- Mergers
- Valuation Of Merger Candidates
- Analysis Of A Leveraged Buyout
- Business Failure
- Alternatives For Failing Businesses
The Role And Objective Of Financial Management
The Domestic And International Financial Marketplace
Evaluation Of Financial Performance
Financial Planning And Forecasting
The Time Value Of Money
Risk And Return On At&t Common Stock
Fixed-income Securities: Characteristics And Valuation
Common Stock: Characteristics,valuation, And Issuance
Capital Budgeting And Cash Flow Analysis
Capital Budgeting: Decision Criteria And Real Option Considerations
Capital Budgeting And Risk
The Cost Of Capital
Capital Structure Concepts
Capital Structure Management In Practice
Dividend Policy
Working Capital Management
The Management Of Cash And Marketable Securities
Management Of Accounts Receivable And Inventories
Lease And Intermediate-term Financing
Financing With Derivatives
Risk Management
Internationan Financial Management
Corporate Restructuring
