Contents Chapter 1 The Corporation and Financial Markets 1 Chapter 2 Introduction to Financial Statement Analysis 7 Chapter 3 Financial Decision Making and the Law of One Price 21 Chapter 4 The Time Value of Money 31 Chapter 5 Interest Rates 59 Chapter 6 Valuing Bonds 79 Chapter 7 Investment Decision Rules 97 Chapter 8 Fundamentals of Capital Budgeting 117 Chapter 9 Valuing Stocks 135 Chapter 10 Capital Markets and the Pricing of Risk 147 Chapter 11 Optimal Portfolio Choice and the Capital Asset Pricing Model 161 Chapter 12 Estimating the Cost of Capital 181 Chapter 13 Investor Behavior and Capital Market Efficiency 191 Chapter 14 Capital Structure in a Perfect Market 201 Chapter 15 Debt and Taxes 211 Chapter 16 Financial Distress, Managerial Incentives, and Information 221 Chapter 17 Payout Policy 237 Chapter 18 Capital Budgeting and Valuation with Leverage 249 Chapter 19 Valuation and Financial Modeling: A Case Study 269 Chapter 20 Financial Options 279 Chapter 21 Option Valuation 291 Chapter 22 Real Options 303 Chapter 23 Raising Equity Capital 331 Chapter 24 Debt Financing 341 Chapter 25 Leasing 345 Chapter 26 Working Capital Management 353 Chapter 27 Short-Term Financial Planning 361 Chapter 28 Mergers and Acquisitions 367