Basic Finance An Introduction to Financial Institutions Investments and Management 11th edition by Herbert Mayo ISBN 1305464988 9781305464988

Ch 1: An Introduction to Basic Finance

Ch 1: Introduction

1.1: The Divisions of Finance

1.2: Key Financial Concepts

1.3: Assumptions

1.4: Finance and Other Business Disciplines

1.5: Plan of the Text

1.6: Relationships

Part 1: Financial Institutions

Ch 2: The Role of Financial Markets and Financial Intermediaries

Ch 2: Introduction

2.1: The Role of Money

2.2: The Role of Interest Rates

2.3: Financial Markets and the Transfer of Savings

2.4: The Indirect Transfer Through Financial Intermediaries

2.5: Commercial Banks

2.6: Thrift Institutions

2.7: Regulation of Commercial Banks and Thrift Institutions

2.8: Life Insurance Companies

2.9: Pension Plans

2.10: Money Market Mutual Funds and Money Market Instruments

2.11: Competition for Funds

Ch 2: Summary

Ch 2: Review Objectives

Ch 2: Relationships

Ch 2: Answers

Ch 3: Investment Banking

Ch 3: Introduction

3.1: The Transfer of Funds to Business

3.2: The Role of Investment Bankers

3.3: Volatility of the Market for Initial Public Offerings

3.4: Shelf Registrations

3.5: The Regulation of New Public Issues of Corporate Securities

3.6: Sarbanes-Oxley Act of 2002

Ch 3: Summary

Ch 3: Review Objectives

Ch 3: Internet Assignment

Ch 4: Securities Markets

Ch 4: Introduction

4.1: Market Makers

4.2: The Mechanics of Investing in Securities

4.3: The Short Sale

4.4: Measures of Securities Prices

4.5: Foreign Securities

4.6: Competition in the Securities Markets

Ch 4: Summary

Ch 4: Review Objectives

Ch 4: Internet Assignment

Ch 4: Problems

Ch 4: Additional Problems with Answers

Ch 4: Answers

Ch 4: Relationships

Ch 4a: Answers

Ch 5: The Federal Reserve

Ch 5: Introduction

5.1: The Role of the Federal Reserve

5.2: Structure of the Federal Reserve

5.3: The Expansion of Money and Credit

5.4: The Tools of Monetary Policy

5.5: The Impact of Fiscal Policy on Credit Markets

5.6: Impact of an Inflationary Economic Environment on Credit Markets

Ch 5: Summary

Ch 5: Review Objectives

Ch 5: Internet Assignments

Ch 5: Relationships

Ch 5: Answers

Ch 6: International Currency Flows

Ch 6: Introduction

6.1: Foreign Currencies and the Rate of Exchange

6.2: Balance of Payments

6.3: The Role of the International Monetary Fund

Ch 6: Summary

Ch 6: Review Objectives

Ch 6: Problems

Ch 6: Additional Problems with Answers

Ch 6: Answers

Ch 6: Relationships

Ch 6a: Answers

Part 2: Financial Tools

Ch 7: The Time Value of Money

Ch 7: Introduction

7.1: The Future Value of a Dollar

7.2: Solving Time Value Problems Using Financial Calculators

7.3: The Present Value of a Dollar

7.4: The Future Value of an Annuity of a Dollar

7.5: The Present Value of an Annuity of a Dollar

7.6: Illustrations of Compounding and Discounting

7.7: Nonannual Compounding

Ch 7: Summary

Ch 7: Summary of the Equations for the Interest Factors

Ch 7: Review Objectives

Ch 7: Problems

Ch 7: Additional Problems with Answers

Ch 7: Answers

Ch 7: Relationships

Ch 7a: Answers

Ch 8: Risk and Its Measurement

Ch 8: Introduction

8.1: The Return on an Investment

8.2: The Sources of Risk

8.3: The Standard Deviation as a Measure of Risk

8.4: Risk Reduction Through Diversification—An Illustration

8.5: Beta Coefficients

8.6: Regression Analysis and the Estimation of Beta Coefficients

8.7: The Capital Asset Pricing Model and an Investment’s Required Return

Ch 8: Summary

Ch 8: Review Objectives

Ch 8: Internet Assignments

Ch 8: Problems

Ch 8: Additional Problems with Answers

Ch 8: Answers

Ch 8: Relationships

Ch 8a: Answers

Ch 9: Analysis of Financial Statements

Ch 9: Introduction

9.1: General Accounting Principles

9.2: The Balance Sheet

9.3: The Income Statement

9.4: Statement of Cash Flows

9.5: Limitations of Accounting Data

9.6: Depreciation

9.7: Ratio Analysis of Financial Statements

9.8: Liquidity Ratios

9.9: Activity Ratios

9.10: Profitability Ratios

9.11: Leverage Ratios

9.12: Coverage Ratios

9.13: Analysis of Financial Statements and the Internet

Ch 9: Summary

Ch 9: Review Objectives

Ch 9: Internet Assignment

Ch 9: Problems

Ch 9: Additional Problem with Answers

Ch 9: Answers

Ch 9: Relationships

Ch 9a: Answers

Part 3: Investments

Ch 10: The Features of Stock

Ch 10: Introduction

10.1: Equity

10.2: Common Stock

10.3: Dividend Policy

10.4: Cash Dividends

10.5: Stock Dividends

10.6: Stock Splits

10.7: Dividend Reinvestment Plans

10.8: Repurchase of Stock

Ch 10: Summary

Ch 10: Review Objectives

Ch 10: Internet Assignments

Ch 10: Problems

Ch 10: Additional Problems with Answers

Ch 10: Answers

Ch 10: Relationships

Ch 10a: Answers

Ch 11: Stock Valuation

Ch 11: Introduction

11.1: Valuation of Common Stock: The Present Value and the Growth of Dividends

11.2: Risk and Stock Valuation

11.3: Alternative Valuation Techniques: Multiplier Models

11.4: Stock Valuation and a Word of Caution

Ch 11: Summary

Ch 11: Review Objectives

Ch 11: Internet Assignments

Ch 11: Problems

Ch 11: Additional Problems with Answers

Ch 11: Answers

Ch 11: Relationships

Ch 11a: Answers

Ch 12: The Features of Long-Term Debt—Bonds

Ch 12: Introduction

12.1: Characteristics of All Debt Instruments

12.2: Types of Corporate Bonds

12.3: Foreign Bonds

12.4: Registered and Book Entry Bonds

12.5: Retiring Debt

12.6: Government Securities

12.7: Obtaining Information on Bonds

Ch 12: Summary

Ch 12: Review Objectives

Ch 12: Relationships

Ch 12: Answers

Ch 13: Bond Pricing and Yields

Ch 13: Introduction

13.1: Bond Pricing

13.2: Yields

Ch 13: Summary

Ch 13: Review Objectives

Ch 13: Problems

Ch 13: Additional Problems with Answers

Ch 13: Answers

Ch 13: Relationships

Ch 13a: Answers

Ch 14: Preferred Stock

Ch 14: Introduction

14.1: The Features of Preferred Stock

14.2: Preferred Stock and Bonds Contrasted

14.3: Valuation (Pricing) of Preferred Stock

14.4: Analysis of Preferred Stock

14.5: Disadvantages of Preferred Stock from an Investor’s Perspective

Ch 14: Summary

Ch 14: Review Objectives

Ch 14: Problems

Ch 14: Additional Problems with Answers

Ch 14: Answers

Ch 14: Relationships

Ch 14a: Answers

Ch 15: Convertible Securities

Ch 15: Introduction

15.1: Features of Convertible Bonds

15.2: The Valuation of Convertible Bonds

15.3: Premiums Paid for Convertible Debt

15.4: Convertible Preferred Stock

15.5: Calling Convertibles and Investment Returns

Ch 15: Summary

Ch 15: Review Objectives

Ch 15: Problems

Ch 15: Additional Problems with Answers

Ch 15: Answers

Ch 15: Relationships

Ch 15a: Answers

Ch 16: Investment Returns

Ch 16: Introduction

16.1: The Computation of Returns

16.2: Historical Investment Returns

Ch 16: Summary

Ch 16: Review Objectives

Ch 16: Problems

Ch 16: Additional Problems with Answers

Ch 16: Answers

Ch 16: Relationships

Ch 16a: Answers

Ch 17: Investment Companies

Ch 17: Introduction

17.1: Investment Companies: Origins and Terminology

17.2: Closed-End Investment Companies

17.3: Sources of Return from Investing in Closed-End Investment Companies

17.4: Mutual Funds

17.5: The Portfolios of Mutual Funds

17.6: The Portfolios of Specialized Mutual Funds

17.7: The Returns Earned on Investments in Mutual Funds

17.8: Selecting a Mutual Fund

17.9: Exchange-Traded Funds (ETFs)

Ch 17: Summary

Ch 17: Review Objectives

Ch 17: Internet Assignments

Ch 17: Problems

Ch 17: Additional Problems with Answers

Ch 17: Answers

Ch 17: Relationships

Ch 17a: Answers

Part 4: Corporate Finance

Ch 18: Forms of Business and Corporate Taxation

Ch 18: Introduction

18.1: The Three Components of Financial Management

18.2: Sole Proprietorships, Partnerships, and Corporations

18.3: Corporate Taxation

18.4: Taxation of Corporate Losses

Ch 18: Summary

Ch 18: Review Objectives

Ch 18: Problems

Ch 18: Additional Problems with Answers

Ch 18: Answers

Ch 18: Relationships

Ch 18a: Answers

Ch 19: Break-Even Analysis and the Payback Period

Ch 19: Introduction

19.1: Break-Even Analysis

19.2: The Payback Period

Ch 19: Summary

Ch 19: Review Objectives

Ch 19: Problems

Ch 19: Additional Problems with Answers

Ch 19: Answers

Ch 19: Relationships

Ch 19a: Answers

Ch 20: Leverage

Ch 20: Introduction

20.1: Operating Leverage

20.2: Operating Leverage and Risk

20.3: Financial Leverage

20.4: Financial Leverage and Risk

20.5: Financial Leverage Through Preferred Stock Financing

Ch 20: Summary

Ch 20: Review Objectives

Ch 20: Problems

Ch 20: Additional Problems with Answers

Ch 20: Answers

Ch 20: Relationships

Ch 20a: Answers

Ch 21: Cost of Capital

Ch 21: Introduction

21.1: Components of the Cost of Capital

21.2: Cost of Capital: A Weighted Average

21.3: The Optimal Capital Structure

21.4: The Marginal Cost of Capital

21.5: The Optimal Capital Structure and the Value of the Firm’s Stock

21.6: Cost of Capital: Review and Problem Areas

Ch 21: Summary

Ch 21: Review Objectives

Ch 21: Problems

Ch 21: Additional Problems with Answers

Ch 21: Answers

Ch 21: Relationships

Ch 21a: Answers

Ch 22: Capital Budgeting

Ch 22: Introduction

22.1: Valuation and Long-Term Investment Decisions

22.2: Importance of Cash Flow

22.3: Introduction to Discounted Cash Flow Methods of Capital Budgeting

22.4: Net Present Value

22.5: Internal Rate of Return

22.6: Net Present Value and Internal Rate of Return Compared

22.7: Ranking Investment Alternatives

22.8: The Introduction of Risk into Capital Budgeting

22.9: Risk Adjustments in Capital Budgeting

Ch 22: Summary

Ch 22: Review Objectives

Ch 22: Problems

Ch 22: Additional Problems with Answers

Ch 22: Answers

Ch 22: Relationships

Ch 22a: Answers

Ch 23: Forecasting

Ch 23: Introduction

23.1: Planning

23.2: Fluctuations in Asset Requirements

23.3: Forecasting External Financial Requirements: Percent of Sales

23.4: The Percent of Sales Summarized as an Equation

23.5: Forecasting External Financial Requirements: Regression Analysis

23.6: Forecasting External Financial Requirements: Changes in Fixed Assets

Ch 23: Summary

Ch 23: Review Objectives

Ch 23: Problems

Ch 23: Additional Problems with Answers

Ch 23: Answers

Ch 23: Relationships

Ch 23a: Answers

Ch 24: Cash Budgeting

Ch 24: Introduction

24.1: The Cash Budget

24.2: The Differences between a Cash Budget and an Income Statement

24.3: The Cash Budget Illustrated

Ch 24: Summary

Ch 24: Review Objectives

Ch 24: Problems

Ch 24: Additional Problem with Answers

Ch 24: Answers

Ch 24: Relationships

Ch 24a: Answers

Ch 25: Management of Current Assets

Ch 25: Introduction

25.1: Working Capital and Its Management

25.2: The Impact of the Operating Cycle on Working Capital Policy

25.3: Financing and Working Capital Policy

25.4: The Importance of Cash to Working Capital Management

25.5: The Inventory Cycle

25.6: The Economic Order Quantity

25.7: Management of Accounts Receivable

25.8: Cash Management

25.9: Money Market Securities and Yields

Ch 25: Summary

Ch 25: Review Objectives

Ch 25: Problems

Ch 25: Additional Problems with Answers

Ch 25: Answers

Ch 25: Relationships

Ch 25a: Answers

Ch 26: Management of Short-Term Liabilities

Ch 26: Introduction

26.1: Accruals

26.2: Commercial Bank Loans

26.3: Trade Credit

26.4: Commercial Paper

26.5: Secured Loans

26.6: Factoring

Ch 26: Summary

Ch 26: Review Objectives

Ch 26: Problems

Ch 26: Additional Problems with Answers

Ch 26: Answers

Ch 26: Relationships

Ch 26a: Answers

Ch 27: Intermediate-Term Debt and Leasing

Ch 27: Introduction

27.1: Intermediate-Term Debt

27.2: Leasing

27.3: Accounting for Leases

Ch 27: Summary

Ch 27: Review Objectives

Ch 27: Problems

Ch 27: Additional Problems with Answers

Ch 27: Answer

Ch 27: Relationships

Ch 27a: Answers

Part 5: Derivatives

Ch 28: Options: Puts and Calls

Ch 28: Introduction

28.1: Options

28.2: The Intrinsic Value of a Call Option

28.3: Leverage

28.4: Writing Call Options

28.5: Put Options

28.6: Stock Index Options

28.7: The Volatility Index (The VIX)

Ch 28: Summary

Ch 28: Review Objectives

Ch 28: Internet Assignment

Ch 28: Problems

Ch 28: Additional Problems with Answers

Ch 28: Answers

Ch 28: Relationships

Ch 28a: Answers

Ch 29: Futures and Swaps

Ch 29: Introduction

29.1: Futures Contracts

29.2: Leverage

29.3: Hedging

29.4: Financial and Currency Futures

29.5: Stock Index Futures

29.6: Swaps

Ch 29: Summary

Ch 29: Review Objectives

Ch 29: Problems

Ch 29: Additional Problems with Answers

Ch 29: Answers

Ch 29: Relationships

Ch 29a: Answers

Appendix A: Interest Factors for the Future Value of One Dollar FVIF = (1+1 i)n

Appendix B: Interest Factors for the Present Value of One Dollar PVIF = 1/(1+i)n

Appendix C: Interest Factors for the Future Value of an Annuity of One Dollar FVAIF = (1+ i)n-1/i

Appendix D: Interest Factors for the Present Value of an Annuity of One Dollar PVAIF = 1-1/(1+i)n/i

Appendix E: Using Excel to Solve Financial Problems

Appendix F: Answers to Selected Problems

Index