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INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT 10TH EDITION PDF

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Test-Bank-for-Investment-Analysis-and-Portfolio-Managementth-Edition-by- resourceone.info I4l4rk O9jbbf. 1 of 15 TEST BANK > CONTROL PANEL > POOL. Investment Analysis & Portfolio. Management, Tenth Edition. Frank K. Reilly and Keith C. Brown. Vice President of Editorial, Business: Jack W. Calhoun. Investment Analysis and Portfolio Management | 10th Edition. Frank K. Reilly/ Keith C. Brown. View as Instructor. Product cover for Investment Analysis and.

Finally, there is a new section on the tax treatment of preferred-stock dividends and on tax-deductible preferred stock. In addition, the growth option as it relates to the value of a convertible security is explored, and there is a crisper treatment of the option value of the stock component. Chapter 22 contains an important new section on credit derivatives. Also in this chapter, the interest-rate swap example has been changed, and there is additional discussion of replacement risk.

The last three chapters of the book have been extensively revised as well. In Chapter 23, "Mergers and the Market for Corporate Control," new sections appear on control premiums and on valuation analyses to determine the worth of a prospective acquisition. There is a new treatment of anti-takeover amendments, with particular attention to the poison pill. Many new empirical studies on acquisitions are explored.

In Chapter 24, the sections on spin-offs and on equity carveouts have been largely rewritten. Also in this chapter, many changes have been made to the section on leveraged buyouts.

With respect to distress restructuring, there is a new section on the role played by "vulture" capitalists. The last chapter of the book, "International Financial Management," has a new section on economic exposure to unexpected currency movements and how to analyze the direction and magnitude of the effect. There is a new treatment of currency forward and futures contracts.

A new example of interest-rate parity and covered interest arbitrage appear in this chapter as well. Although these are the important changes, all materials have been updated and there are a number of minor changes in presentation.

Collectively, these should make the book more readable and interesting. For the student, select end-ofchapter problems are set up in Excel format and are available from the Prentice Hall Web site: www. These problems are denoted by the computer symbol. In addition, each chapter, save for the first, contains self-cor- xviii P r efa ce rection problems. In a handful of chapters, reference is made to FinCoach exercises.

This math practice software program is available for viewing and purchase at the PH Web site: www. The presentation has been credited by Richard Gendreau, Bemidji State University, and can be accessed under student Resources.

At the end of each chapter, I make reference to John Wachowicz's wonderful Web site: www. He is a co-author of mine for another text, and his constantly revised site provides links to hundreds of financial management Web sites, grouped according to major subject areas.

Extensive references to other literature also appear at the end of each chapter. Finally, Craig Holden, Indiana University, provides students with instructions for building financial models through his Spreadsheet Modeling book and CD series.

This saleable product will be shrink-wrapped with the text or available on its own. For the instructor, there is a comprehensive Instructor's Manual, which contains suggestions for organizing the course, solutions to all the problems that appear at the end of the chapters, and teaching notes for the cases. Also available in the Instructor's Manual are transparency masters of most of the figures in the text these also are available through the aforementioned Prentice Hall Web site.

Legg Mason Annual Report: Embracing Change

Another aid is a Test-Item File of extensive questions and problems. This is available in both hard copy and custom computerized test bank format, revised by Sharon H. Garrison, University of Arizona, through your Prentice Hall sales representative. The finance area is constantly changing. It is both stimulating and far reaching.

I hope that Financial Management and Policy, 12th edition, imparts some of this excitement and contributes to a better understanding of corporate finance. If so, I will regard the book as successful. University ofNew Mexico Dr. Glenn L. Stevens Dr. Andrew L. Its businesses were not high tech: razor blades and toiletries; stationery products Parker, Waterman and Paper Mate pens and pencils ; Braun electric shaver, toothbrush, hair dryer, and coffee maker limes; and DuraceLl batteries.

Management was acclaimed for its vision and efficiency in creating value for its shareholders. Products were distributed in over countries.

Gillette was consistently on the list of Fortune's most admired companies. But there were problems lurking beneath the surface.

Profit margins and asset turnover were beginning to erode. Certain noncore product lines acquired in the past to diversify away from razor blades were not earning their economic keep. In profits declined by 12 percent from the prior year, the first time this had occurred in modern memory.

The downward earnings trend continued in , and share price declined by nearly 50 percent in a little over one year.

To add insult to injury, Gillette was rumored to be vulnerable to a takeover bid by ColgatePalmolive. By mid, however, the market capitalizations of the two companies were nearly the same. Once growth begins to falter, the effect on the present value of expected future earnings share price takes a real hit, and Gillette experienced the full brunt of this shift. What to do? A reorientation to value creation was compelling. Management efficiency needed to occur as well as a restructuring to get back to core competence where returns could be earned in excess of what the financial markets required.

Hawley, was appointed in The stationery products division and the household products division were put up for sale. These divisions provided only meager profitability. Getting back to core competence meant a focus on razors and blades, associated grooming products, Braun oral care products, and Duracell batteries. The fruits of this redirection will not be apparent until and beyond. Throughout this book, many of the themes as to value creation and asset management efficiency taken up in this vignette will be explored.

CHAPTER he modern-day financial manager is instrumental to a c o n - sets and new products and 2 determining the best mix of financ- pany's success. As cash flows pulsate through the organization, ing and dividends in relation to a company's overall valuation.

T this individual is at the heart of what is happening. If fi- Investment of funds in assets and people determines the size nance is to play a general management role i n the organization, of the firm, its profits from operations, its business risk, and its liq- the financial manager must be a team player who is constructively uidity.

Obtaining the best mix of financing and dividends determines involved in operations, marketing, and the company's overall strategy. All of this demands a broad outlook and an alert creattv- tasbs as keeping records, preparing financial reports, managing ity that will influence almost all facets of the enterprise. Value is represented by the market price of the company's common stock, which, in turn, is a function of the firm's investment, financing, and dividend decisions.

The idea is to acquire assets and invest in new products and services where expected return exceeds their cost, to finance with those instruments where there is particular advantage, tax or otherwise, and to undertake a meaningful dividend policy for stockholders.

Throughout this book, the unifylng theme is value creation. This occurs when you do something for your shareholders that they cannot do for themselves. It may be that a company enjoys a favorable niche in an attractive industry, and this permits it to earn returns in excess of what the financial markets require for the risk involved.

Perhaps the financial manager is able to take advantage of imperfections in the financial markets and acquire capital on favorable terms. If the financial markets are highly efficient, as they are in many countries, we would expect the former to be a wider avenue for value creation than the latter. Most Financial goal is to maximize shareholder wealth.

Contrast this with diversification, where investors are able to diversify the securities they hold. Therefore, diversification by a company is unlikely to create much, if any, value.

Profit Maximization versus Valiie Creation Frequently, maximization of profits is regarded as the proper objective of the firm, but it is not as inclusive a goal as that of maximizing shareholder value.

For one thing, total profits are not as important as earnings per share. Even maximization of earnings per share, however, is not fully appropriate because it does not take account of the timing or duration of expected returns.

Moreover, earnings per share are based on accounting profits. Though these are certainly important, many feel that operating cash flows are what matter most. Another shortcoming of the objective of maximizing earnings per share is that it does not consider the risk or uncertainty of the prospective earnings stream.

For information regarding permission s ,write to: Rights and Permissions Department. The landscape of finance has changed a good deal since the last edition, and in this edition I try to capture the changing environment.

In this regard, it is useful to review the important changes. One change you will note is the inclusion of a number of sidebars in the margins of chapters. These sidebars define important terms as well as give alternative explanations and embellishment. Nine new boxed presentations appear, mostly of an international nature, which add practical interest to various aspects of corporate finance.

Three new cases are in this edition, and an existing case has been revised. In total there now are eight cases, covering major issues in financial analysis, valuation, and financing.

Investment Analysis And Portfolio Management Books

Extensive references to the literature, many of which are new, appear at the end of each chapter. By chapter, the important changes follow. In Chapter 1, a new vignette on Gillette appears, as do quotes on what companies say about their corporate objectives.

The chapter has been streamlined. An improved treatment of the tax effect appears in Chapter 4, "Multivariable and Factor Valuation. A number of changes appear in Chapters 8 and 9, which deal with required rates of return and capital structure.

Latest in Others

Such things as market value added, adjusting costs of capital, and the discipline of the capital markets on management appear. There is a new and extended treatment of share repurchase and its important and changing effect. The review of empirical evidence is largely redone, and there is an extended treatment of the managerial implications for dividends and share repurchase. Chapters 12 and 13, "Financial Ratio Analysis" and "Financial Planning," have been moved from the back of the book to precede chapters on working capital management and financing.

Chapter 14 contains xvi a new discussion of electronic funds transfers, and Chapter 15 has new sections dealing with credit scoring, outsourcing credit and collection procedures, and B2B exchanges for acquiring inventories in the overall management of the supply chain.

In addition, there is new discussion of loan pricing. In Chapter 17, the section on inflation and interest rates has been redone. The tax treatment of lease financing has been changed in Chapter 18 to reflect the current situation. Finally, there is more emphasis on how changing tax rates and residual values affect the relative value of a lease contract.

In Chapter 19, "Issuing Securities," there is a new section on SEC registration procedures and an entirely new treatment of venture capital and its role in financing the new enterprise. The high-yield debt section in Chapter 20 has been extensively revised, in keeping with changing conditions. The bond refunding example in this chapter has been changed, and there is a revised treatment of private placements. Finally, there is a new section on the tax treatment of preferred-stock dividends and on tax-deductible preferred stock.

In addition, the growth option as it relates to the value of a convertible security is explored, and there is a crisper treatment of the option value of the stock component.

Chapter 22 contains an important new section on credit derivatives. Also in this chapter, the interest-rate swap example has been changed, and there is additional discussion of replacement risk. The last three chapters of the book have been extensively revised as well. In Chapter 23, "Mergers and the Market for Corporate Control," new sections appear on control premiums and on valuation analyses to determine the worth of a prospective acquisition. There is a new treatment of anti-takeover amendments, with particular attention to the poison pill.

Many new empirical studies on acquisitions are explored. In Chapter 24, the sections on spin-offs and on equity carveouts have been largely rewritten.

Also in this chapter, many changes have been made to the section on leveraged buyouts. With respect to distress restructuring, there is a new section on the role played by "vulture" capitalists. The last chapter of the book, "International Financial Management," has a new section on economic exposure to unexpected currency movements and how to analyze the direction and magnitude of the effect. There is a new treatment of currency forward and futures contracts.

CFA Program Curriculum 2018 Level I Volumes 1-6 Box Set

A new example of interest-rate parity and covered interest arbitrage appear in this chapter as well. Although these are the important changes, all materials have been updated and there are a number of minor changes in presentation. Collectively, these should make the book more readable and interesting.

For the student, select end-ofchapter problems are set up in Excel format and are available from the Prentice Hall Web site: www. These problems are denoted by the computer symbol. In addition, each chapter, save for the first, contains self-cor- xviii P r efa ce rection problems. In a handful of chapters, reference is made to FinCoach exercises. This math practice software program is available for viewing and purchase at the PH Web site: www.

The presentation has been credited by Richard Gendreau, Bemidji State University, and can be accessed under student Resources. At the end of each chapter, I make reference to John Wachowicz's wonderful Web site: www.

He is a co-author of mine for another text, and his constantly revised site provides links to hundreds of financial management Web sites, grouped according to major subject areas. Extensive references to other literature also appear at the end of each chapter. Finally, Craig Holden, Indiana University, provides students with instructions for building financial models through his Spreadsheet Modeling book and CD series.

This saleable product will be shrink-wrapped with the text or available on its own. For the instructor, there is a comprehensive Instructor's Manual, which contains suggestions for organizing the course, solutions to all the problems that appear at the end of the chapters, and teaching notes for the cases. Also available in the Instructor's Manual are transparency masters of most of the figures in the text these also are available through the aforementioned Prentice Hall Web site.

Another aid is a Test-Item File of extensive questions and problems. This is available in both hard copy and custom computerized test bank format, revised by Sharon H. Garrison, University of Arizona, through your Prentice Hall sales representative. The finance area is constantly changing.

It is both stimulating and far reaching. I hope that Financial Management and Policy, 12th edition, imparts some of this excitement and contributes to a better understanding of corporate finance.

If so, I will regard the book as successful. University ofNew Mexico Dr. Glenn L. Stevens Dr. Andrew L. Its businesses were not high tech: razor blades and toiletries; stationery products Parker, Waterman and Paper Mate pens and pencils ; Braun electric shaver, toothbrush, hair dryer, and coffee maker limes; and DuraceLl batteries.

Management was acclaimed for its vision and efficiency in creating value for its shareholders. Products were distributed in over countries. Gillette was consistently on the list of Fortune's most admired companies. But there were problems lurking beneath the surface.

Profit margins and asset turnover were beginning to erode. Certain noncore product lines acquired in the past to diversify away from razor blades were not earning their economic keep. In profits declined by 12 percent from the prior year, the first time this had occurred in modern memory.

The downward earnings trend continued in , and share price declined by nearly 50 percent in a little over one year. To add insult to injury, Gillette was rumored to be vulnerable to a takeover bid by ColgatePalmolive. By mid, however, the market capitalizations of the two companies were nearly the same.

Once growth begins to falter, the effect on the present value of expected future earnings share price takes a real hit, and Gillette experienced the full brunt of this shift. What to do? A reorientation to value creation was compelling. Management efficiency needed to occur as well as a restructuring to get back to core competence where returns could be earned in excess of what the financial markets required.

Hawley, was appointed in The stationery products division and the household products division were put up for sale. Time preference for income consumption and the set of investment opportunities available in the economy. Liquidity risk.

Exchange rate risk. Financial risk. Market risk. Add Question Here Multiple Choice 0 points Modify Remove Question The uncertainty of investment returns associated with how a firm finances its investments is known as Answer Business risk. Answer An increase in the firm's beta Adding more financial debt to the firm's balance sheet relative to equity Changing the business strategy to include new product lines with more volatile expected cash flows Investors perceive the stock as being more risky An increase in the risk-free required rate of return.

Refer to Exhibit 1. What was your holding period return? What was your holding period yield? What was your annual holding period return? Answer 0. What was your annual holding period yield? Answer What was your annual holding period yield Annual HPY?

What was your arithmetic mean annual yield for the investment in XMen Industries. What was your geometric mean annual yield for the investment in XMen? What is your expected rate of return [E R ] for next year? Compute the standard deviation of the rate of return for the one year period.

Compute the coefficient of variation for your portfolio. Government T-bills 2.

Long-term bonds 4. What are the real rates of return for each of these securities? Answer 4. If next year the real rates all rise by 10 percent while inflation climbs from 1. Answer 1.With respect to distress restructuring, there is a new section on the role played by "vulture" capitalists. In a large corporation, the stock may be so widely held that stockholders cannot even make known their objectives, much less control or influence management.

If the financial markets are highly efficient, as they are in many countries, we would expect the former to be a wider avenue for value creation than the latter. Wachowicz Jr. These problems are denoted by the computer symbol.