CONTENTS PART ONE VALUE 3 1 Finance and the Financial Manager 4 2 Present Values, the Objectives of the Firm, and Corporate Governance 14 3 How to Calculate Present Values 34 4 The Value of Bonds and Common Stocks 56 5 Why Net Present Value Leads to Better Investment Decisions than Other Criteria 84 6 Making Investment Decisions with the Net Present Value Rule 112 PART TWO RISK 45 7 Introduction to Risk, Return, and the Opportunity Cost of Capital 146 8 Risk and Return 182 9 Capital Budgeting and Risk 216 PART THREE PRACTICAL PROBLEMS IN CAPITAL BUDGETING 245 10 A Project Is Not a Black Box 246 11 Strategy and the Capital Investment Decision 276 12 Agency Problems, Management Compensation, and the Measurement of Performance 300 PART FOUR FINANCING DECISIONS AND MARKET EFFICIENCY 331 13 Corporate Financing and the Six Lessons of Market Efficiency 332 14 An Overview of Corporate Financing 364 15 How Corporations Issue Securities 386 PART FIVE PAYOUT POLICY AND CAPITAL STRUCTURE 417 16 Payout Policy 418 17 Does Debt Policy Matter? 446 18 How Much Should a Firm Borrow? 470 19 Financing and Valuation 504 PART SIX OPTIONS541 20 Understanding Options 542 21 Valuing Options 566 22 Real Options 598 PART SEVEN DEBT FINANCING 625 23 Valuing Government Bonds 626 24 Credit Risk 650 25 The Many Different Kinds of Debt 670 26 Leasing 700 PART EIGHT RISK MANAGEMENT 721 I 27 Managing Risk722 28 Managing International Risks 756 PART NINE FINANCIAL PLANNING AND, THE MANAGEMENT OF i WORKING CAPITAL 785 29 Financial Analysis and Planning786 30 Working Capital Management 816 31 Short-Term Financial Planning 842 PART TEN MERGERS, CORPORATE | CONTROL, ANDI GOVERNANCE 871 32 Mergers 872 33 Corporate Restructuring 908 34 Governance and Corporate Control around the World 936 PART ELEVEN CONCLUSION961 35 Conclusion: What We Do and Do Not Know about Finance 962