Chapter 6
- Bond Valuation Model
- sell at a discount? premium? par?
- relationship of interest rates (market yield) to bond's coupon rate?
- valuation of zero coupon bonds?
- valuation of interest bearing bonds?
- relationship of interest rates (market yield) to bond's coupon rate?
- Dividend Valuation Model for Common Stock
- how long security is held?
- amount and frequency of dividends?
- growth in dividends?
- dividends yield?
- required rate of return?
- amount and frequency of dividends?
- relationship of required rate of return, dividend yield, and growth in dividends?
- PV/FV Valuation of Common Stock
- Preferred Stock Valuation Model
- Chapter 7
- Concept/interpretation of:
- Preferred Stock Valuation Model
- Degree of Operating Leverage (DOL)
- Degree of Financial Leverage (DFL)
- Degree of Total Leverage (DTL)
- Degree of Financial Leverage (DFL)
- (What do DOL, DFL, DTL mean? What cause the leverage/disproportionality? How does degree of
leverage reflect risk? What is favorable leverage? What is unfavorable leverage?)
- Reinvestment rate risk
- Interest rate risk
- Purchasing power risk
- Currency risk
- Business risk
- Financial risk
- Chapter 8
- Capital budgeting: definition, purpose
- Mutally exclusive vs. independent vs. contingent vs. complementary projects
- Calculation of "expected future incremental, relevant, after-tax net cash flows" for capital budgeting purposes:
- Reinvestment rate risk
- initial outlay (asset acquisition)
- annual operating cash flows
- terminal cash flows (asset diposition)
- changes in net working capital
- sunk costs
- effect of tax rate on depreciation, expenses, taxable income
- after tax selling price of equipment
- replacement vs. expansion vs. new vs. mandated projects
- annual operating cash flows
- Economic life of a project vs. economic life of an asset
- Chapter 11
- Authorized vs. issued vs. outstanding vs. treasury stock
- Par value
- Voting rights
- Stock repurchasing
- Stock dividend
- Reverse stock split
- Stock split
- Cumulative voting
- Stock rights
- Proxy
- Dividend policy
- Dividends per share
- Board of Directors
- Alternative views on how dividends should be paid
- Advantages and disadvantages of being a publicly-held corporation
Chapter 12
- Why issue debt instead of equity?
- Why issue equity instead of debt?
- Ways to retire debt prior to maturity
- Primary types of risk with debt securities
- Indenture
- Covenant
- Trustee
- Subordinated Debt
- Call feature
- Collateral
- Debenture
- Zero coupon bonds
- Face value vs. maturity value vs. par value
- Term loan
- Debt ratings for default risk
- Coupon rate
- Normal rate
- relationship of price to:
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