Licensed to: [e-mail]
Licensed to: [e-mail]
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Cop righ 2008 Thomson L arning n . All Righ s R s r 
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Ma no b opi 
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Licensed to: [e-mail]
d I
g n F. Brigh m
U iv rsity of lorid
Mich l C. hrh rdt
U iv rsity of T ss
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Fin nci l M n g m nt: Th ory nd Pr ctic
Tw lfth dition
� g . rig m d Mic l . � r rdt
VP ditori l 
ir ctor: ditori l �ssist nt: T chnology Proj ct M n g r:
J ck W. l o ęd l Sc oltz M tt McKi y
ditor in Chi f: Sr. Cont nt Proj ct M n g r: �rt 
ir ctor:
ęl x vo Ros rg liff K ll m y t y s y
x c tiv ditor: M rk ting M n g r: Sr. First Print B y r:
Mik R y olds J so Kr ll S d Mil wski
Sr. 
v lopm nt l ditor: Sr. M rk ting Print r:
�liz t T omso Comm nic tions M n g r: RR o ll y & So s
Jim Ov rly Will rd OH
OP R�GHT 2008 2005 ęLLR�GHTS R�S�RV� . Li r ry of o gr ss o trol
T omso So t  W st r p rt �o p rt of t is work cov r d y � m r: 2007921348
of T T omso orpor tio . t copyrig t r o m y
T omso t St r logo d r prod c d or s d i y form or mor i form tio o t
So t  W st r r tr d m rks o r prod cts co t ct s t:
s d r i d r lic s .
T omso L r i g ęc d mic
R so rc t r
Pri t d i t U it d St t s of
1 00 42  0
ęm ric stor g d r tri v l syst ms or
i y ot r m r wit o t
Thomson High r d c tion
1 2 3 4 5 09 08 07 06 t writt p rmissio of t
5191 � torp o l v rd
p lis r.
M so OH 45040
�S � 13: 978 0 324 42269 6
USę
�S � 10: 0 324 42269 5 or p rmissio to s m t ri l
from t is t xt or prod ct s mit
r q st o li t http: www
.thomsonrights.com.
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W w wrot t first ditio of F y P w
d fo r go ls: 1 to cr t t xt t t wo ld lp st d ts m k tt r fi ci l
d cisio s; 2 to provid ook t t co ld s d i t i trod ctory M ę
co rs t o t t w s compl t o g for s s r f r c t xt i follow o
c s co rs s d ft r gr d tio ; 3 to motiv t st d ts y d mo str ti g t t
fi c is ot i t r sti g d r l v t; d 4 to m k t ook cl r o g so
t t st d ts co ld go t ro g t m t ri l wit o t w sti g it r t ir tim or
t ir prof ssor s tim tryi g to fig r o t w t w w r s yi g.
0

O r mp sis t ro g o t t ook is o t ctio s t t m g r c d
s o ld t k to i cr s t v l of t firm. Str ct ri g t ook ro d v l 
tio c s co ti ity d lps st d ts s ow v rio s topics r r l t d to
o ot r.
ęs its titl i dic t s t is ook com i s t ory d pr ctic l pplic tio s. ę
d rst di g of fi c t ory is sol t ly ss ti l for yo d v lopi g
d or impl m ti g ff ctiv fi ci l str t gi s. t t ory lo is  t s ffi
�
spr ds ts to ill str t ow t ory is ppli d i pr ctic . � d d w li v
is sol t ly ss ti l for
st d t s s cc ssf l o s rc d s s q t c r r. T r for m y x i its
i t ook com dir ctly from t ccomp yi g � spr ds ts. M y of t
spr ds ts lso provid ri f t tori ls y w y of d t il d comm ts o �
f t r s t t w v fo d to sp ci lly s f l s c s Go l S k T l s d
m y fi ci l f ctio s.
T ook gi s wit f d m t l co c pts i cl di g ckgro d o t
co omic d fi ci l viro m t t tim v l of mo y fi ci l st t 
m ts wit mp sis o c s flows o d v l tio risk lysis d stock
v l tio . Wit t is ckgro d w go o to disc ss ow sp cific t c iq s d
d cisio r l s c s d to lp m ximiz t v l of t firm. T is org iz 
tio provid s fo r import t dv t g s:
1. ov ri g tim v l of mo y rly lps st d ts s ow d w y xp ct d
f t r c s flows d t rmi t v l of t firm. ęlso it t k s tim for st 
d ts to dig st TVM co c pts d to l r ow to do t r q ir d c lc l tio s
so it is good to cov r TVM co c pts rly d oft .
2. M g rs s o ld try to m ximiz t f d m t l v l of firm w ic is
d t rmi d y c s flows s r v l d i fi ci l st t m ts. O r rly cov r
g of fi ci l st t m ts t s lps st d ts s ow p rtic l r fi ci l
d cisio s ff ct t v rio s p rts of t firm d t r s lti g c s flow. ęlso
fi ci l st t m t lysis provid s xc ll t v icl for ill str ti g t
s f l ss of spr ds ts.
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3. Most st d ts v t os w o do ot pl to m or i fi c  r i t r
st d i stock d o d v l s r t s of r t r o i v stm ts d t lik .
T ility to l r is f ctio of i divid l i t r st d motiv tio so
F rly cov r g of s c riti s d s c rity m rk ts is
p d gogic lly so d.
4. O c sic co c pts v st lis d it is si r for st d ts to d rst d
ot ow d w y corpor tio s m k sp cific d cisio s i t r s of c pit l
dg ti g r isi g c pit l worki g c pit l m g m t m rg rs d t lik .
F is d sig d prim rily for s i t i trod ctory M ęfi c
co rs d s r f r c t xt i follow o c s co rs s d ft r gr d tio . T r
is o g m t ri l for two t rms sp ci lly if t ook is s ppl m t d wit c s s
d or s l ct d r di gs. T ook c lso s d s d rgr d t i trod c
tory t xt wit xc ptio lly good st d ts or w r t i trod ctory co rs is
t g t ov r two t rms.
ęs i v ry r visio w pd t d d cl rifi d m t ri ls t ro g o t t t xt
r vi wi g t tir ook for compl t ss s of xpositio d c rr cy. W
m d dr ds of sm ll c g s to k p t t xt p to d t wit p rtic l r
mp sis o pd ti g t r l world x mpl s d i cl di g t l t st c g s
i t fi ci l viro m t d fi ci l t ory. � dditio w m d m r
of l rg r c g s. Som ff ct ll c pt rs som i volv r org izi g s ctio s
mo g c pt rs d som modify m t ri l cov r d wit i sp cific c pt rs.
B tt r int gr tion of th t xtbook nd th ccomp nying xc T�� Kit spr d
sh t mod ls for ch ch pt r.
W ssig d s ctio m r to c m or s ctio i c c pt r d s d t s c
tio m rs to id tify t corr spo di g m t ri l i t � spr ds ts t t
ccomp y t c pt rs. � dditio m y t l s wit i t t xt i volv x m
pl s of fi ci l lysis t t w r work d o t i t ccomp yi g spr ds ts.
or m y s c T l s w ow s ow t � row d col m di gs so t t
st d ts c sily d rst d t spr ds t lysis t t d rli s t T l .
nd of s ction S lf T st probl ms.
St d ts l r sp cific co c pts d d rst d p rtic l r m ric l x mpl s
st if t y work wit ill str tiv pro l ms imm di t ly ft r t y r d t s ctio
t t xpl i s t t p rtic l r m t ri l. T r for w ow provid opport ity
for imm di t r i forc m t y vi g m ric l pro l ms t t d of c
m or s ctio . T sw rs to t pro l ms r s ow i t t xt d t work d
o t sol tio s r provid d i t � K spr ds t mod l for t c pt r.
nd of ch pt r probl ms r nk d by diffic lty.
� p st ditio s w rr g d t d of c pt r pro l ms y topic ot y diffi
c lty l v l. St d ts wo ld oft st rt worki g t pro l ms it diffic lt o
r l tiv ly q ickly com fr str t d d giv p. � t is ditio w rr g d t
pro l ms y diffic lty. T first s t of pro l ms is d sig t d � sy  d most
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st d ts s o ld l to work t m wit o t m c tro l . T com
� t rm di t  pro l ms w ic r it rd r d t ll gi g  w ic
r still lo g r d mor compl x. T is r ki g proc d r r d c s st d ts str ss
d fr str tio c s t y c cl rly id tify t pro l ms t t r goi g to
r q ir mor ffort.
Improv d T st B n
W m d s st ti l improv m ts to t B i cl di g t dditio of
m ro s pro l ms t t r simil r to t � sy  � t rm di t  d ll g
i g pro l ms t t d of c c pt r. iff r t i str ctors v diff r t
vi ws o ow st d ts s o ld t st d t t w B c s d to pro
vid s t of r l tiv ly str ig tforw rd pro l ms � sy d � t rm di t  t t
d l wit ll sp cts of fi ci l m g m t. Most i str ctors lso s f w
ll gi g x m pro l ms w r st d ts m st fig r o t ow to pply
fi c co c pts to d l wit w d diff r t sit tio s t y v  t s
for . T pro l ms c lso c g d lgorit mic lly s disc ss d low.
Th ThomsonNźW W b b s d co rs pl tform.
W disc ss t w T omso �OW W  s d co rs d liv ry syst m i mor
d t il l t r i t pr f c t o v ry import t f t r of T omso �OW is t
v il ility of lgorit mic v rsio s of t d of c pt r pro l ms d t
B pro l ms. T is llows i str ctor to sily cr t W  s d om work
ssig m ts wit pro l m i p ts d sw rs t t r iq to c st d t. T
ssig m ts r tom tic lly gr d d d t scor s r post d to gr d s t
t t c xport d i to � . c s t ssig m ts r iq to c st 
d t d r tom tic lly gr d d it is f si l for sy i str ctor �s t r y
ot r ki d?! to ssig om work fr q tly. � o r ow cl ss s w typic lly
ssig s ort W  s d om work q iz for v ry 1 2 cl ss s ssio s. O r st 
d ts v told s t t t y ppr ci t vi g s c fr q t ssig m ts c s
it lps t m k p p i t co rs . Mor ov r w v otic d improv m t
Mor foc s d W b xt nsions in th  Libr ry.
� w m t ri l m st dd d wit c ditio to k p st d ts o t c tti g
dg . To m k room for t w m t ri l w id tifi d sp ci liz d topics t t r
import t t ot ss ti l i v ry i trod ctory fi c co rs . W t m d
t is m t ri l cc ssi l s c pt r W �xt sio provid d s ędo P
fil o t t xt ook s W sit . � t pr vio s ditio t r w s o ly o W
�xt sio for c pt r wit som c pt rs W �xt sio s cov ri g m ltipl
topics. W ow v m ltipl W �xt sio s for t os c pt rs wit c
�xt sio foc s d o p rtic l r topic. T is m k s it si r for i str ctor to
pick d c oos  y dditio l i divid l topics or s wis s to cov r.
Improv d P�w rP�int Shows.
W c r f lly r vi w d d r vis d c P P s ow for cl rity d ff ctiv 
ss. � dditio t s ows r ow i st d rd Microsoft t mpl t d t s
c sily c stomiz d y i str ctors.
R org niz d th disc ssion of fin nci l m rk ts.
� t pr vio s ditio t cov r g of fi ci l m rk ts w s som w t fr g
m t d wit r l t d topics i g cov r d i t i trod ctory c pt r t o d
v l tio c pt r d t stock v l tio c pt r. W v ow co solid t d t is
m t ri l disc ssi g fi ci l s c riti s i stit tio s d m rk ts i pt r 1.
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T is co solid tio llow d s to limi t som r d d ci s d provid
mor i t gr t d disc ssio of t m t ri l. ęs it ow st ds pt r 1 i cl d s
d t il d disc ssio of fi ci l s c riti s dg f ds glo l stock m rk ts d
�POs. T is w str ct r provid s two import t dv t g s. irst i str ctor
c it t gro d r i g d cov r fi ci l m rk ts d ri g t first cl ss.
c s t is m t ri l is d scriptiv r t r t pro l m ori t d it is ot
sol t ly critic l for st d ts to v r d t m t ri l for t first cl ss;
i st d t y c go ck d r d it ft r t first cl ss. S co d st d ts r typ
ic lly i t r st d i fi ci l m rk ts d compr siv cov r g i t first
cl ss stim l t s st d t i t r st d t si sm.
Fin nci l st t m nt n lysis mov d p to imm di t ly follow fin nci l st t 
m nts nd c sh flows.
pt r 4 ę lysis of i ci l St t m ts ow imm di t ly follows fi ci l
st t m ts d c s flows. T is rly cov r g of fi ci l st t m t lysis lps
provid voc l ry d co c pts t t r import t for t r m i d r of t ook.
R org niz d th disc ssion of th d t rmin nts of int r st r t s.
� t pr vio s ditio o r disc ssio of t d t rmi ts d implic tio s of
i t r st r t s w s fr gm t d wit cov r g i ot t i trod ctory d t
o d v l tio c pt rs. W v ow co solid t d t is m t ri l i pt r 5
o ds o d V l tio d � t r st R t s i s ctio t t imm di t ly follows
o r disc ssio of o d prici g. T is w str ct r is p d gogic lly tt r c s
st d ts w o d rst d t sics of o d prici g r i tt r positio to 
fit from disc ssio of w y diff r t fix d i com s c riti s v diff r t yi lds.
B tt r link b tw n risk, r t rn, nd stock pricing.
W ow cov r t c pt rs o risk d r t r pt rs 6 d 7 imm di t ly
for t c pt r o stock prici g pt r 8 . T is p rmits st d ts to pply t
co c pts t y l r d o t t risk r t r tr d off to stock prici g.
W m d too m y sm ll improv m ts wit i c c pt r to m tio t m ll
t som of t mor ot l o s r disc ss d low.
Ch pt r 1: �n źv rvi w of Fin nci l M n g m nt
nd th Fin nci l nvironm nt.
T op i g vig tt ow s glo l scop d t r is w ox o t ics
�t ics for � divid ls d si ss s. ęs ot d rli r w co solid t d d
improv d o r disc ssio of s c riti s i stit tio s d m rk ts. c s m y
M ęst d ts will ot t k s p r t � v stm ts co rs m y i str ctors lik
to cov r or t l st r comm d dditio l m t ri l o s c riti s d fi ci l
m rk ts. Wit t t i mi d w dd d t r w W �xt sio s t t 1 d scri
s c ritiz tio 2 provid ov rvi w of d riv tiv s d 3 cov r stock m rk ts
i mor d t il i cl di g disc ssio s of m rk t i d x s d t costs of tr di g.
� c of t s w W �xt sio s ow s its ow s p r t P P s ow.
Ch pt r 2: Tim V l of Mon y.
W dd d w op i g vig tt o t rol pl y d y TVM co c pts i t c r
r t p sio f d crisis. W lso improv d t cov r g of iti s wit t
ity form l ow s d o t diff r c s tw tim li s of diff r t p r
p t iti s w ic m k s t form l it mor i t itiv . W dd d t r w W
�xt sio s o o t d riv tio of ity form l s ot r o co ti o s
compo di g d t ird o t t l r ppro c .
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W lso improv d o r c lc l tor t tori ls for t most pop l r T� d HPc l
c l tors si g ill str tio s t t r id tic l to t t xt x mpl s. T r for
w st d t r ds o t s y t f t r v l s i t t xt or s c sim l
t o sly l r from t t tori l ow to fi d t sp cific V wit c lc l tor.
St d ts t ll s t t l r i g ow to s t ir c lc l tors s t y l r TVM co 
c pts is m c mor ffici t t st dyi g t two s p r t ly.
Ch pt r : Fin nci l St t m nts, C sh Flow, nd T x s.
W dd d w ox o S r s Oxl y d fi ci l fr d.
Ch pt r 4: �n lysis of Fin nci l St t m nts.
W dd d w op i g vig tt o ow firms g id lysts r i gs sti
m t s. T lys s of commo siz d d p rc t c g st t m ts r ow t
t r i t gr t d wit t � K w ic s ows st d ts ow sy it is to do ll
t c lc l tio s i volv d i fi ci l lysis si g spr ds t.
Ch pt r : Bonds, Bond V l tion, nd Int r st R t s.
T c pt r o o d prici g ow com s rli r i t ook clos r to t c pt r
o tim v l of mo y. T is p rmits st d ts to pply t ir fi ci l c lc l tor
d � skills to o d lysis w il tim v l of mo y co c pts r still fr s
i t ir mi ds. ęlso t s ctio o c lc l ti g o d yi lds ow follows imm di
t ly t s ctio o c lc l ti g o d pric s si c t s topics r so clos ly
r l t d. W lso improv d o r cov r g of � PR� � d ��L f ctio s
providi g d t il d x mpl s i t K . W co solid t d tt r i t gr t d
cov r g of i t r st r t d t rmi ts wit o r disc ssio of d f lt d i t r st
r t pric risk. W improv d t disc ssio of T�PS d w s ow ow to s t m
i stim ti g t r l risk fr r t d t i fl tio pr mi m. i lly w ow
v s p r t W �xt sio s for 1 z ro co po o ds d t ir t x tio 2
mor d t il d xpl tio of T�PS 3 d r tio lysis d 4 t p r xp ct 
W improv d t xpl tio of corr l tio d cov ri c i cl di g tt r
xpl tio for ow � c s d i stim ti g corr l tio d cov ri c from
istoric d t . W lso improv d t disc ssio of t d ow to stim t t .
Ch pt r 7: Portfolio Th ory nd źth r �ss t Pricing Mod ls.
W limi t d t op i g s ctio o m s ri g portfolio risk c s t is is
ow cov r d i pt r 6 so t c pt r gi s wit disc ssio of ffici t
portfolios. W dd d w s ctio o t st d rd d vi tio of � ss t port
folio i cl di g sy ppro c for c lc l ti g t portfolio st d rd d vi tio .
� t s ctio o t m  r c mod l w ow provid t URLfor K t
r c  s W sit w ic s d t for s i stim ti g p r m t rs of t m 
r c mod l. W lso f d p o r disc ssio of vior l fi c .
Ch pt r : Stocks, Stock V l tion, nd Stock M rk t q ilibri m.
W ow disc ss stock m rk t d t s r port d i S  d ot r
so rc s rly i t c pt r so st d ts will f mili r wit stock q ot tio s d
pric r g s for w cov r stock v l tio . W lso dd d ri f disc ssio of
t mod l for stock v l tio w ic is cov r d i mor d t il i pt r 15 .
T s ctio o pr f rr d stock prici g ow imm di t ly follows commo stock
v l tio d t c pt r ds wit improv d disc ssio of ffici t m rk ts.
Ch pt r : Fin nci l źptions nd �pplic tions in Corpor t Fin nc .
To co sist t wit t om cl t r s d y optio s tr d rs w c g d som
of t c pt r s t rms. W lso improv d t xpl tio of t i omi l mod l
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i cl di g t form l for t m r of s r s i t dg portfolio. Mor ov r
w dd d w ox s o i ci l R porti g d �mploy Stock Optio s d
T x s d Stock Optio s  d w dd d w s ctio titl d ępplic tio s of
Optio Prici g i orpor t i c .
Ch pt r 10: Th Cost of C pit l.
lot tio costs r o lo g r i s p r t s ctio t r cov r d wit c com
po t cost of c pit l .g. flot tio costs of d t r cov r d wit t cost of d t.
W improv d d str mli d t disc ssio of t divisio l cost of c pit l d
t pro ct cost of c pit l d w dd d w s ctio o t cost of c pit l for
priv t ly ld or sm ll firms.
Ch pt r 11: Th B sics of C pit l B dg ting: v l ting C sh Flows.
c s m y st d ts v tro l d rst di g t r l tiv m rits of diff r
t r ki g crit ri w ow cov r �PV first d w pr s t it s t prim ry cri
t rio c s it is dir ctly r l t d to t m ximiz tio of s r old r w lt . W
t cov r t �RR d ot r m t ods d pr s t t m s s ppl m ts to �PV.
� dditio w mov d t q iv l t l ity �ęę ppro c o t of t
l st ditio  s W �xt sio d i to t is ditio  s t xt ook s ctio t t cov rs
r pl c m t c i s.
Ch pt r 12: C sh Flow stim tion nd Risk �n lysis.
W mor cl rly s ow t li k tw s ppli d to fi ci l st t m ts d
s ppli d to pro ct. W mov d t m ric l x mpl to t gi i g of
t c pt r so t t st d ts c s co cr t pplic tio for w disc ss s c
co c pts s s k costs opport ity costs tc. W lso dd d xpl tio of
�PV r k v lysis.
Ch pt r 1 : R l źptions.
W dd d disc ssio d m ric l x mpl for t v l tio of growt optio .
Ch pt r 14: Fin nci l Pl nning nd For c sting Fin nci l St t m nts.
W dd d w op i g vig tt o ow comp i s do fi ci l pl i g s d
o r c t s rv y of corpor t x c tiv s. W lso mov d t s ctio o ę � so
t t it ow pr c d s t pro ct d fi ci l st t m t ppro c . Wit t is
rr g m t st d ts c g t d rst di g of t sic logic of fi ci l
for c sti g from t simpl ę � ppro c d t is lps follow t logic of t
mor compl x pro ct d fi ci l st t m t ppro c .
Ch pt r 1 : Corpor t V l tion, V l  B s d M n g m nt,
nd Corpor t Gov rn nc .
W r wrot d xp d d o r cov r g of corpor t gov r c . � dditio w
dd d w ox o T S r s Oxl y ęct of 2002 d orpor t Gov r c .
Ch pt r 1 : C pit l Str ct r 
cisions: Th B sics.
W s t corpor t v l tio mod l to d v lop w xpl tio of r c pit l
iz tio t t giv s st d ts tt r d rst di g of stock r p rc s s d ot r
c pit l str ct r c g s. W lso dd d disc ssio of t wi dows of oppor
t ity t ory d w dd d s ctio t t disc ss s d sy t siz s t r s lts
of r c t mpiric l st di s o c pit l str ct r .
Ch pt r 1 : 
istrib tions to Sh r hold rs: 
ivid nds nd R p rch s s.
W dd d w op i g vig tt disc ssi g Microsoft s r c t c s distri 
tio s. W lso dd d disc ssio of t lif  cycl  ypot sis.
Ch pt r 20: L s Fin ncing.
W dd d w ox o idd d g rs i l si g W t o o  t K ow
H rt o !
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Ch pt r 22: Working C pit l M n g m nt.
W dd d w op i g vig tt s d po F m g zi  s l s rv y o
worki g c pit l m g m t. W dd d w ox s d o t l F
c s m g m t scor c rd d w disc ss t provisio s d implic tio s of
ck 21.
Ch pt r 2 : M rg rs, LBźs, 
iv stit r s, nd Holding Comp ni s.
W dd d w op i g vig tt o t P&G Gill tt m rg r w improv d t
disc ssio of t d st d pr s t v l ppro c d w dd d s ctio cov r
i g t fr  c s  flow to q ity ppro c .
Ch pt r 2 : M ltin tion l Fin nci l M n g m nt.
W compl t ly r  wrot t disc ssio of i t r tio l mo t ry syst ms d t
li ks tw xc g r t r gim s i t r tio l tr d d i fl tio . W lso
dd d w s ctio t t provid s d t il d disc ssio d ill str tio of c pit l
dg ti g for i t r tio l pro cts.
-
T omso �OW is T omso P lis i g s w W  s d co rs m g m t sys
t m d it c s ml ssly i t gr t d i to l ck o rd d W T for t os
i str ctors lr dy si g t os W  s d co rs m g m t syst ms.
T omso �OW i cl d s t followi g f t r s wit mor to dd d ov r tim .
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T omso �OW. T is pr  t st is tom tic lly scor d d t st d t is giv
l r i g pl t t id tifi s t c pt r s s ctio s o w ic t st d t ds to
improv . T is l r i g pl s li ks to  ook for c c pt r so st d t
c lso r d d st dy t m t ri l wit o t l vi g t comp t r. � dditio
post t st lps t st d t d t rmi if or s s m st r d t m t ri l.
ęs pr vio sly ot d T omso �OW c cr t lgorit mic v rsio s of s l ct d
of c pt r d B pro l ms. Wit st f w clicks i str ctor c cr t
W  s d om work ssig m t t t co t i s iq pro l ms d sw rs
for c st d t. T ssig m t is tom tic lly gr d d d t scor s r
post d to gr d s t t t c xport d i to � or i to t gr d s ts of
l ck o rd d W T. Simil rly i str ctor c cr t s ts of pr ctic pro 
l ms s d o lgorit mic v rsio s of t d of c pt r pro l ms d B
pro l ms . � i c pr ctic m k s p rf ct so T omso �OW s ility to
q ickly d sily cr t pr ctic pro l ms d gr d om work ssig m ts c
v dr m tic imp ct o st d t s progr ss d k owl dg .
-
T omso �OW lso co t i s  ook w ic is v ry lpf l to st d ts w o s
t � divid liz d L r i g Pl i T omso �OW s o rs w r  t y c r d
t  ook d work pr ctic pro l ms wit o t v r l vi g t comp t r.
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T omso O�� si ss Sc ool �ditio is o li d t s t t dr ws from
t world ccl im d T omso i ci l d t so rc s i cl di g t S�
isclos r t str m irst ll d Worldscop d t s s. �ow yo c giv
yo r st d ts t opport ity to pr ctic wit si ss sc ool v rsio of t
 s m � t r t s d d t s t t rok rs d lysts ro d t world s
v ry d y. T omso O�� S� provid s 1 o  click dow lo d of fi ci l
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st t m ts to � 2 d t from dom stic i t r tio l comp i s 3 10
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y rs of fi ci l d t ; d 4 o  click P r S t lys s.
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W lso v v il l pro l ms t t r ly o d t from T omso O�� S�.
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to t v r c gi g t r of t W t s pro l ms r pd t d fr 
q tly d t y c fo d o t t xt ook s W sit http: www
.thomson d .com fin nc brigh m.
H r is som of t d t provid d y T omso O�� S�:
I B S Cons ns s stim t s.
� cl d s co s s s stim t s v r g s m s d m di s; lyst y lyst
r i gs cov r g ; lysts for c sts s d o 15 i d stry st d rd m s r s;
c rr t d istoric cov r g for t s l ct d 500 comp i s. rr t cov r g is
5 y rs forw rd pl s istoric d t from 1976 for U.S. comp i s d from 1987 for
i t r tio l comp i s wit c rr t d t pd t d d ily d istoric d t
pd t d mo t ly.
Worldscop .
� cl d s comp y profil s fi ci ls cco ti g r s lts d m rk t p r s r
d t for t s l ct d 500 comp i s goi g ck to 1980 ll pd t d d ily.
� cl d s comp y profil s l d q rt rly comp y fi ci ls prici g i for
m tio d r i gs stim t s for s l ct d U.S. d di comp i s lly
from 1987 q rt rly for t l st 10 y rs d mo t ly for pric s ll pd t d w kly.

t Str m Pricing.
ily i t r tio l prici g i cl di g s r pric i form tio op ig low
clos P � pl s i d x d xc g r t d t for t l st 10 y rs.
ILX Syst ms 
l y d Q ot s.
� cl d s 20 mi t d l y d q ot s of q iti s d i dic s from U.S. d glo l
tick rs cov ri g 130 xc g s i 25 d v lop d co tri s.
Comt x R l Tim N ws.
� cl d s c rr t ws r l s s.
S C dg r Filings nd Glob l Im g So rc Filings.
� cl d s r g l tory d o r g l tory fili gs for ot corpor t d i divid l
titi s. �dg r fili gs r r l tim d go ck 10 y rs; im g fili gs r pd t d
d ily d go ck 7 y rs.
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F i cl d s ro d r g of cill ry m t ri ls d sig d to
c st d ts l r i g d to m k it si r for i str ctors to pr p r for d
co d ct cl ss s. ęll r so rc s v il l to st d ts r of co rs lso v il l to
i str ctors d i str ctors lso v cc ss to t co rs m g m t tools.
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St G i
T is s ppl m t o tli s t k y s ctio s of c c pt r d it provid s st 
d ts wit s t of q stio s d pro l ms simil r to t os i t t xt d i t
B lo g wit work d o t sol tio s. � str ctors s ldom s t S y
t ms lv s t st d ts oft fi d it s f l so w r comm d t t i str c
tors sk t ir ookstor s to v copi s v il l . O r ookstor s g r lly v
to r ord r it w ic tt sts to its pop l rity wit st d ts.
T c n� �g S pp nt
T y S o T omso �OW co t i s t tori ls for fo r com
mo ly s d fi ci l c lc l tors for � d for P P . T c lc l tor t to
ri ls cov r t os f t r s st d ts d to work t pro l ms i t t xt.
cti s � Fin nci C c t�r
Writt y P m l H ll t is d ook is d sig d to lp i cr s st d ts
d rst di g of ot fi c d fi ci l c lc l tors li g t m to work
pro l ms mor q ickly d ff ctiv ly.
� dditio to t s pri t d r so rc s d t it ms ot d ov m y ot r
r so rc s r v il l o t W t F W sit http: www
.thomson d .com fin nc brigh m. T s cill ri s r lso v il l t ot
t � str ctor s W sit d t T omso �OW sit . T s cill ri s i cl d :
xc T�� Kits
Profici cy wit spr ds ts is sol t c ssity for ll M ęst d ts. Wit
t is i mi d w cr t d � spr ds ts c ll d K  for c c pt r to
K
mod ls i cl d xpl tio s d scr s ots t t s ow st d ts ow to s
to s rv s s lf
�n  Libr ry: W b xt nsions nd W b Ch pt rs.
M y c pt rs v ędo P pp dic s t t provid mor d t il d cov r
g of topics t t w r ddr ss d i t c pt r. � dditio t s fo r sp ci l
iz d topics r cov r d i P W c pt rs: ki g R l tio s ips Worki g
pit l M g m t �xt sio s P sio Pl M g m t d i ci l
M g m t i �ot for Profit si ss s.
N ws dg .
� ws�dg is p s  s rvic of d ily ws off ri g cov r g of r ki g stori s.
�t is tim ly t orit tiv d dv rtisi g fr .
N wsWir : Fin nc in th N ws.
� wsWir provid s s mm ri s of r c t fi c ws stori s i d x d y topic.
ę dli s ct c t gory k y words s mm ry of t ws rticl rticl
so rc li d q stio s to sp r f rt r t o g t d disc ssio r i cl d d.
T s mm ri s r c r f lly s l ct d d pr p r d y P l olst r d �m ry
Tr of �ort st r U iv rsity d t y f cilit t t i corpor tio of l t 
r ki g ws i to t cl ssroom.
nd of Ch pt r Spr dsh t Probl ms.
� c c pt r s B  pro l m w r st d ts st rt wit spr d
s t t t co t i s fi ci l d t pl s g r l i str ctio s r l ti g to solvi g
sp cific pro l m. T mod l is p rti lly compl t d wit di gs t o form 
l s so t st d t m st lit r lly ild mod l. T is str ct r g id s t st d t
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t ro g t pro l m mi imiz s c ss ry typi g d d t try d lso
m k s it sy to gr d t work si c ll st d ts sw rs r i t s m loc 
tio s o t spr ds t. T p rti l spr ds ts for t B  pro 
l ms r v il l to st d ts o t ook s W sit w il t compl t d mod
ls r i fil s o t � str ctor s portio of t W sit .
Thomson źN  BS Probl m S ts.
T ook s W sit s s t of pro l ms t t r q ir cc ssi g t T omso
O�� si ss Sc ool �ditio W d t . Usi g r l world d t st d ts r t
t r l to d v lop t skills t y will d i t r l world.
Cyb rprobl ms.
T W sit lso co t i s y rpro l ms  w ic r q ir st d ts to go to sp 
cific W sit s d sw r s ri s of q stio s. ę sw rs r v il l o t
� str ctors W sit .
Int r ctiv St dy C nt r.
T t xt ook s W sit co t i s li ks to ll W sit s t t r cit d i c c pt r.
� str ctors v cc ss to ll of t m t ri ls list d ov pl s dditio l co rs
m g m t tools. T s r v il l t: 1 F � str ctor
comp io W sit http: www.thomson d .com fin nc brigh m or o t
� str ctor s R so rc or o t � str ctor s portio of t T omso �OW
W sit . T s m t ri ls i cl d :
S� ti�ns M n
T is compr siv m l co t i s work d o t sol tio s to ll d of c pt r
m t ri ls. �t is v il l i ot pri t d l ctro ic forms t t � str ctor s W sit .
T r is Mi i s t t d of c c pt r. T s c s s cov r ll t ss ti l
iss s pr s t d i t c pt r d t y provid t str ct r for o r cl ss l c
t r s. or c Mi i s w d v lop d s t of P P slid s t t pr s t
gr p s t l s lists d c lc l tio s for s i l ct r s. ęlt o g s d o t
Mi i s s t slid s r compl t ly s lf co t i d i t s s t t t y c
s d for l ct r s r g rdl ss of w t r st d ts r r q ir d to r d t mi i
c s s. ęlso i str ctors c sily c stomiz t slid s d t y c co v rt d
1
q ickly i to y P P sig T mpl t . opi s of t s fil s r o t
� str ctor s W sit d t T omso �OW sit . �f i str ctors w t st d ts to
v copi s of t P P s ows for cl ss to f cilit t ot t ki g t y c
giv st d ts cc ss to t s fil s t ro g t T omso �OW sit .
Mini C s Spr dsh ts.
� dditio to t P P slid s w lso provid � spr ds ts t t do t
c lc l tio s r q ir d i t Mi i s s. T s spr ds ts r simil r to t
K xc pt t m rs corr spo d to t Mi i s s r t r t t c pt r
x mpl s d w dd d som f t r s t t m k it possi l to do w t if
lysis o r l tim sis i cl ss. W s lly gi o r l ct r s wit t
P P pr s t tio t ft r w v xpl i d sic co c pt w toggl 
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2
to t mi i c s � fil d s ow ow t lysis c do i � . or
x mpl w t c i g o d prici g w gi wit t P P s ow d
cov r t sic co c pts d c lc l tio s. T w toggl to � d s s 
sitivity s d gr p to s ow ow o d pric s c g s i t r st r t s d tim to
m t rity v ry. Mor d mor st d ts r ri gi g t ir l ptops to cl ss d
t y c follow lo g doi g t w t if lysis for t ms lv s. � str ctors c
giv st d ts cc ss to t s fil s t ro g t T omso �OW W sit .
Sol tions to nd of Ch pt r Spr dsh t Probl ms.
T p rti l spr ds ts for t B  pro l ms r v il l to st 
d ts w il t compl t d mod ls r i fil s o t � str ctor s W sit .
Sol tions to Thomson źN  BS Probl m S ts.
T T omso O�� S� pro l ms s t r q ir st d ts to s r l world d t .
ęlt o g t sol tio s c g d ily s t d t c g w provid i str ctors
wit r pr s t tiv  sw rs.
Sol tions to Cyb rprobl ms.
T y rpro l ms r q ir st d ts to go to sp cific W sit s d sw r
s ri s of q stio s. ęlt o g t sol tio s c g fr q tly s t d t c g
w provid r pr s t tiv  sw rs o t � str ctor s W sit .
T st B n
T B co t i s mor t 1 200 cl ss t st d q stio s d pro l ms.
� form tio r g rdi g t topic d d gr of diffic lty lo g wit t compl t
sol tio for ll m ric l pro l ms is provid d wit c q stio . T B
is v il l i fo r forms: 1 i pri t d ook; 2 i Microsoft Word fil s; 3 i
comp t riz d t st k softw r p ck g �x m Vi w w ic s m y f t r s
t t m k t st pr p r tio scori g d gr d r cordi g sy; d 4 o
T omso �OW w ic f t r s t ility to cr t lgorit mic ssig m ts o
t W t t r iq to c st d t d t t r tom tic lly scor d d p t
or i t gr t d wit t gr d s ts
T xtc �ic th Thomson L rning źnlin C s Libr ry.
Mor t 100 c s s writt y � g . rig m Li d Kl i d ris
zz rd r ow v il l vi t � t r t d w c s s r dd d v ry y r.
T s c s s r i d t s t t llows i str ctors to s l ct c s s d cr t t ir
ow c stomiz d c s ooks. Most of t c s s v ccomp yi g spr ds t
mod ls t t w il ot ss ti l for worki g t c s do r d c m r cr c 
i g d t s l v mor tim for st d ts to co sid r co c pt l iss s. T mod
ls lso ill str t ow comp t rs c s d to m k tt r fi ci l d cisio s.
s s t t w v fo d p rtic l rly s f l for t diff r t c pt rs r list d
i t d of c pt r r f r c s. T c s s c s sol tio s d spr ds t mod
ls c pr vi w d d ord r d y i str ctors t http: www.t xtchoic 2.com.
T omso So t  W st r will provid complim t ry s ppl m ts or s p
pl m t p ck g s to t os dopt rs q lifi d d r T omso  s doptio policy.
Pl s co t ct yo r s l s r pr s t tiv to l r ow yo m y q lify. �f s
dopt r or pot ti l s r yo r c iv s ppl m ts yo do ot d pl s r t r
t m to yo r s l s r pr s t tiv .
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T is ook r fl cts t fforts of gr t m y p opl ov r m r of y rs. irst
w wo ld lik to t k t followi g p opl w o lp d wit t Tw lft �ditio :
St v Jo so U iv rsity of �ort r �ow
P tty H tfi ld r dl y U iv rsity
ęl x T g Morg St t U iv rsity
�ric l z r Mill rsvill U iv rsity
P rt G gop d y y St. lo d St t U iv rsity
Jo St sfi ld U iv rsity of Misso ri
St rt Gill ęrizo St t U iv rsity
S co d prof ssors d prof ssio ls w o r xp rts o sp cific topics
r vi w d rli r v rsio s of i divid l c pt rs or gro ps of c pt rs. W r gr t 
f l for t i sig ts provid d y: �dw rd �. ęltm � w ork U iv rsity; M ry
Sc ry ęmr m ę lysis Gro p �co omics; � ss r ęrs di U iv rsity of
Misso ri; ę d l ęziz H m oldt St t U iv rsity; Willi m r k U iv rsity of
G orgi ; Gordo R. o r U iv rsity of l w r ; S. r c k of � w
� gl d d U iv rsity of M ss c s tts; vid T. row U iv rsity of lorid ;
M rk l ry U iv rsity of lorid ; �. r c r d rickso Syr c s U iv rsity;
Myro Gordo U iv rsity of Toro to; H l H to rig m o g U iv rsity;
Jo H lm t Roc st r � stit t of T c ology; H g H t r � st r
W s i gto U iv rsity; J m s �. J ckso Okl om St t U iv rsity; V
J igi �ort st r U iv rsity; K it H. Jo so U iv rsity of K t cky;
Ro rt Ki sc ick G org M so U iv rsity; Ric rd L ompt Wic it St t
U iv rsity; �l L vi U iv rsity of Mi sot  l t ; J m s T. Li dl y
U iv rsity of So t Mississippi; R. i l P c V lp r iso U iv rsity; R lp ę.
Pop lifor i St t U iv rsity S cr m to; J y Ritt r U iv rsity of lorid ;
ęll R pp port U iv rsity of �ort r �ow ; Mic l Ry g rt U iv rsity of
lorid ; io Ro rtso S ttl U iv rsity; J m s Sc ll im U iv rsity of Ut ;
G. tt St w rt St r St w rt & o.; Ro rt Stro g U iv rsity of M i t
Oro o; � g Swi rto U iv rsity of troit M rcy; Ro rt T gg rt osto
oll g ; Jo t Ti m W lls rgo �ikko � v stm t ędvisors; S rid
Titm U iv rsity of T x s t ę sti ; ęl L. T ck r T mpl U iv rsity; vid
V g U iv rsity of St. T om s; G ry R. W lls �d o St t U iv rsity; d vid
Zi rt U iv rsity of �lli ois t Ur .
� dditio w wo ld lik to t k t followi g p opl w os r vi ws d
comm ts o rli r ditio s d comp io ooks v co tri t d to t is di
tio : Mik ędl r Sy d ę m d S d M. ęl g r �d ęltm r c ę d rso
Ro ę d rso o ę g ll Vi c ępil do H ry ęr old o ę y Gil cock
P t r co K t k r Tom ksto L s r m rl s r grov r
Mic l rry ill dl s Mos  Horim ill r k Tom rry ill rti
Rog r y lto ig Jo ild rs R ss ois oly K it ol s G of oot
K t o dr x H l ow rs Osw ld owli o oyd G. Mic l oyd
P t oy r Jo r dt �liz t r ig Gr g r r M ry rosk v
row K t row ill r gg m Kirt tl r Ro rt tto ill mps y
o rl so S v ri rlso vid ry St v l c o c ę to y
g S s pli sky J y oi S. K. o d ry L l g M cly lo s
M rg r t o sidi P il ool y Jo op l d vid ord ll Jo ot r
rl s ox vid r ry Jo rock tt Roy r m r t lrympl ill mo
Jo l t St v wso S k r Mil s l o r d llv ę d s i
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r rd ill Gr g imkoff L s l y M rk orfm G rycimski
dl y vid rst �d yl ick �d lm rl s �dw rds Jo �llis v
�w rt Jo �zz ll Ric rd dl r Mic l rri Jim ilki s Jo i rty
S s isc r St v li t R ss ogl r r c Ti G llow y P il G rdi l
Mic l G rli gto Jim G rvi ęd m G r Jim G try P ilip Gl sgo R dy rd
Good W lt Go l t r i Gr lowsky T o rry Gr mm tikos �d Gross ickl
Jo Grot ęl Gr w ld M k G pt S m H d w y o H k l J t
H milto S lly H milto G r ld H msmit Willi m H rdi Jo H rris P l
H sti gs o H g St v H wk l H wl y Ro rt H r G org
H tt o s H s H ym K d ll Hill Rog r Hill Tom Hi d l g Li d
Hittl R lp Hocki g J. Ro ld Hoffm ist r Jim Horrig Jo Ho sto Jo
How K it How St v �s rg Jim J ckso K rt J ssw i Kos Jo r ig
Jo so K it Jo so R mo Jo so R y Jo s M l Jos G s K log r s
Mik K ill K dy Jo Ki r Rick Kis Li d Kl i o K ig t
orot y Ko l T odor Ko rs J rosl w Kom ry sky c Kr tovic H rold
Krog rl s Kro ck Ly P illips K g l Jo L mm P. L g How rd
L s r M rti L r c �d L wr c W y L Jim L P g J l s L vi Jo
L wis ck Li k ill Lloyd S s Lo g J dy M s o M g �l M litz
P il M lo T rry M ss ris M i g T rry M rt ll . J. M sso Jo
M t ys Jo Mcęl y ę dy Mc ollo g ill Mc i l Ro i McL g li
Tom Mc J ms id M r �l M ric L rry M rvill Rick M y r St rt �.
Mic lso Jim Mill r �d Mill r Jo Mitc ll rol Mo rdyk o Moor rry
Morris G Morris r d Morriss y ris M sc r ll St My rs vid
� c m Tim � t ll o � st ill � lso o � lso o �i dorf Tom
O ri is O o or Jo O o ll Jim Ols Ro rt Ols r k
O M r vid Ov r y ol P t lo Jim P pp s St p P rris P m
P t rso Gl P try Jim P tti o Ric P ttit ick P ttw y H go P illips Jo
Pi k rto G r ld Pog R. Pott r r kli Potts R. Pow ll ris Pr stopi o
J rry Prock How rd P ck tt H r rt Q igl y G org R c tt o R dcliff ill
R tz K Ri r rl s Ri i Jo Ritc i Pi tr Rivoli ę to io Rodrig z �.
M. Ro ss kis xt r Row ll Mik Ry g rt Jim S c lis ę d l S dik T om s
Sc mpi i K vi Sc lo r d rick Sc dl r M ry J Sc r rl Sc w s r
Jo S ttl ęl S v r Sol S lit �liz t S i lds r d ric S ipl y ilip
S om Ro S ri v s � il Sic rm J. . Silv rs l y Si gl to Jo Si k y St cy
Sirm s J y Smit St v Smit o Sor so vid Sp irs K St ly �d
St d rdi ęl St p s o St v s J rry St v s M rk Sto s Gl Str s rg
P ilip Sw s �r i Swift P l Swi k G ry T llm is T r r ig
T pl y R ss T ssig Ric rd T w l s T d T w l s ę dr w T ompso G org
Trivoli G org Ts ts kos M l Tyss l d vid Upto How rd V ę k
Pr torio s V d ool Pi t r V d r rg P l V d r id Jim V r r gg
P trick Vi c t St v Vi so S s Vissc r Jo W c owicz M rk . W lk r
Mik W lk r S m W v r K o i g W i ill W lc r d W sto �orm
Willi ms To y Wi gl r �d Wolf L rry Wolk o Woods T om s Wrig t
Mic l o Z o g g o Z o is Zocco d K t Z mw lt.
Sp ci l t ks r d to r d W sto Myro Gordo M rto Mill r d
r co Modigli i w o v do m c to lp d v lop t fi ld of fi ci l
m g m t d w o provid d s wit i str ctio d i spir tio ; to Roy r m
w o co tri t d to t m lti tio l fi c c pt r; to L rry Wolk w o
off r d is rd work d dvic for t d v lopm t of t P P s ows; to
l rk d ris zz rd w o lp d s d v lop t spr ds t mod ls; to
ęm li ll St p i Hodg M tt rock S s W itm d ę dr oo r
w o provid d ditori l s pport; d to Jo l Ho sto d P illip v s w os
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work wit s o ot r ooks is r fl ct d i t is t xt. W ow sp ci l t ks to Lo
G p ski o r p st co t or for is m y co tri tio s.
O r coll g s d o r st d ts t t U iv rsiti s of lorid d T ss
g v s m y s f l s gg stio s d t T omso So t  W st r st ff sp 
ci lly �liz t T omso M tt McKi y J so Kr ll liff K ll m y d Mik
R y olds lp d gr tly wit ll p s s of t xt d v lopm t prod ctio d
m rk ti g.
ęt t is poi t t ors g r lly s y som t i g lik t is: W ppr ci t ll t
lp w r c iv d from t p opl list d ov t y r m i i g rrors r of
co rs o r ow r spo si ility. ę d i m y ooks t r r pl ty of r m i 
i g rrors. H vi g xp ri c d diffic lti s wit rrors o rs lv s ot s st d ts
d s i str ctors w r solv d to void t is pro l m i F . ęs
r s lt of o r rror d t ctio proc d r s w r co vi c d t t t ook is r l 
tiv ly fr of mist k s.
P rtly c s of o r co fid c t t f w s c rrors r m i t prim rily
c s w w t to d t ct y rrors i t t xt ook t t m y v slipp d y so
w c corr ct t m i s s q t pri ti gs w d cid d to off r r w rd of 10
p r rror to t first p rso w o r ports t xt ook rror to s. or p rpos s of
t is r w rd rrors i t t xt ook r d fi d s missp ll d words o ro di g
m ric l rrors i corr ct st t m ts d y ot r rror t t i i its compr 
sio . Typ s tti g pro l ms s c s irr g l r sp ci g d diff r c s i opi 
io r g rdi g gr mm tic l or p ct tio co v tio s do ot q lify for t is
r w rd. ęlso giv t v r c gi g t r of t � t r t c g s i W
ddr ss s do ot q lify s rrors lt o g w wo ld ppr ci t r ports of
c g d W ddr ss s. i lly y q lifyi g rror t t s follow t ro g
ff cts is co t d s two rrors o ly. Pl s r port ny rrors to Mich l C.
hrh rdt t th  m il ddr ss giv n b low.
i c is i r l s s t cor rsto of t fr t rpris syst m. Good
fi ci l m g m t is t r for vit lly import t to t co omic lt of
si ss firms c to t tio d t world. c s of its import c cor
por t fi c s o ld t oro g ly d rstood. How v r t is is si r s id t
do  t fi ld is r l tiv ly compl x d it is d rgoi g co st t c g i
r spo s to s ifts i co omic co ditio s. ęll of t is m k s corpor t fi c
stim l ti g d xciti g t lso c ll gi g d som tim s p rpl xi g. W si 
c r ly op t t F y P will lp r d rs d r
st d d solv t fi ci l pro l ms f c d y si ss s tod y.
Mich l C. hrh rdt g n F. Brigh m
U iv rsity of T ss U iv rsity of lorid
� r rdt tk. d G . rig m c . fl. d
 y
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Pr f c v
0
0

Ch pt r 1 ę Ov rvi w of i ci l M g m t
d t i ci l � viro m t2
W b xt nsions 1ę 1 1
Ch pt r 2 Tim V l of Mo y37
W b xt nsions 2ę 2 2
Ch pt r i ci l St t m ts s low d T x s83
W b xt nsion 3ę
Ch pt r 4 ę lysis of i ci l St t m ts122
0

Ch pt r o ds o d V l tio d � t r st R t s156
W b xt nsions 5ę 5 5 5
Ch pt r Risk R t r d t pit l ęss t Prici g Mod l200
W b xt nsions 6ę 6
Portfolio T ory d Ot r ęss t Prici g Mod ls241
Stocks Stock V l tio d Stock M rk t �q ili ri m280
i ci l Optio s d ępplic tio s i orpor t i c 313
W b xt nsion 9ę
0

Ch pt r 10 T ost of pit l340
W b xt nsions 10ę 10
Ch pt r 11 T sics of pit l dg ti g: �v l ti g s lows377
W b xt nsions 11ę 11
Ch pt r 12 s low �stim tio d Risk ę lysis415
W b xt nsions 12ę 12
Ch pt r 1 R l Optio s 457
W b xt nsions 13ę 13
0

Ch pt r 14 i ci l Pl i g d or c sti g i ci l St t m ts486
W b xt nsions 14ę 14
Ch pt r 1 orpor t V l tio V l  s d M g m t
d orpor t Gov r c 517
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Ch pt r 1 pit l Str ct r cisio s: T sics564
W b xt nsion 16ę
Ch pt r 17 pit l Str ct r cisio s: �xt sio s606
Ch pt r 1 istri tio s to S r old rs: ivid ds d R p rc s s639
0

Ch pt r 1 � iti l P lic Off ri gs � v stm t ki g d i ci l R str ct ri g674
W b xt nsion 19ę
Ch pt r 20 L s i ci g 714
W b xt nsions 20ę 20 20
Ch pt r 21 Hy rid i ci g: Pr f rr d Stock W rr ts d o v rti l s742
W b xt nsion 21ę
0

Ch pt r 22 Worki g pit l M g m t774
W b xt nsion 22ę
Ch pt r 2 riv tiv s d Risk M g m t818
W b xt nsion 23ę
Ch pt r 24 kr ptcy R org iz tio d Liq id tio 851
W b xt nsions 24ę 24
Ch pt r 2 M rg rs L Os iv stit r s d Holdi g omp i s881
W b xt nsion 25ę
Ch pt r 2 M lti tio l i ci l M g m t929
Sol tio s to S lf T st Pro l ms969
ę sw rs to � d of pt r Pro l ms1002
S l ct d �q tio s d t 1011
V l s of t ęr s d r t St d rd �orm l istri tio ctio 1026
Gloss ry 1027
N m Ind x 1046
S bj ct Ind x 1050
W b Ch pt rs
Ch pt r 27 Providi g d O t i i g r dit
Ch pt r 2 ędv c d �ss s i s M g m t d � v tory o trol
Ch pt r 2 P sio Pl M g m t
Ch pt r 0 i ci l M g m t i �ot for Profit si ss s
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Pr f c v
0
0

Ch pt r 1
ę Ov rvi w of i ci l M g m t d t i ci l � viro m t 2
T iv  Mi t M ę 3
T orpor t Lif ycl 4
T Prim ry O ctiv of t orpor tio : V l M ximiz tio 7
' 0

0

ę Ov rvi w of t pit l ęlloc tio Proc ss 12
i ci l S c riti s d t ost of Mo y 14
i ci l � stit tio s 19
Typ s of i ci l M rk ts 22
Stock M rk t R t r s 29
ęPr vi w of W t �s ę d 31
 R so rc s 32
S mm ry 32
W b xt nsions
1ę: ę los r Look t M rk ts: S c ritiz tio d Soci l W lf r
1 : ę Ov rvi w of riv tiv s
1 : ę los r Look t t Stock M rk ts
Ch pt r 2
Tim V l of Mo y 37
Tim Li s 38
t r V l s 39
0
0

'
Pr s t V l s 46
i di g t � t r st R t � 48
i di g t � m r of rs � 49
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ę iti s 50
t r V l of Ordi ry ę ity 51
t r V l of ę ity 53
Pr s t V l of Ordi ry ę ity d of ę ity 54
i di g ę ity P ym ts P riods d � t r st R t s 56
P rp t iti s 58
U v s lows 59
t r V l of U v s low Str m 62
Solvi g for � wit U v s lows 63
S mi l d Ot r ompo di g P riods 64
' 0
0
0

r ctio l Tim P riods 68
ęmortiz d Lo s 69
Growi g ę iti s 70
S mm ry 72
W b xt nsions
2ę: riv tio of ę ity orm l s
2 : o ti o s ompo di g d isco ti g
2 : T T l r ęppro c
Ch pt r
i ci l St t m ts s low d T x s 83
i ci l St t m ts d R ports 84
0
0

T l c S t 85
St t m t of s lows 93
Modifyi g ęcco ti g t for M g ri l cisio s 95
0
0
'
MVę d �Vę 103
0
0

T d r l � com T x Syst m 107
S mm ry 112
W b xt nsion
3ę: � divid l T x s
Ch pt r 4
ę lysis of i ci l St t m ts 122
R tio ę lysis 123
Liq idity R tios 123
0
0
0

ęss t M g m t R tios 126
t M g m t R tios 129
' 0
'
Profit ility R tios 132
M rk t V l R tios 134
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Tr d ę lysis ommo Siz ę lysis d P rc t g ę lysis 137
Tyi g t R tios Tog t r: T Po t �q tio 140
omp r tiv R tios d c m rki g 141
0

Us s d Limit tio s of R tio ę lysis 143
Looki g yo d t � m rs 144
S mm ry 145
0

Ch pt r
o ds o d V l tio d � t r st R t s 156
W o �ss s o ds? 157
0

K y r ct ristics of o ds 158
o d V l tio 163
o d i lds 167
g s i o d V l s Ov r Tim 169
o ds wit S mi l o po s 173
T t rmi ts of M rk t � t r st R t s 174
T R l Risk r R t of � t r st r 175
T � fl tio Pr mi m �P 175
T T rm Str ct r of � t r st R t s 186
J k o ds 188
kr ptcy d R org iz tio 189
S mm ry 190
W b xt nsions
5ę: ę los r Look t Z ro o po o ds
5 : ę los r Look t T�PS: Tr s ry � fl tio  Prot ct d S c riti s
5 : o d Risk d r tio
5 : T P r �xp ct tio s T ory d �stim tio of orw rd R t s
Ch pt r
Risk R t r d t pit l ęss t Prici g Mod l 200
� v stm t R t r s 201
0

St d ęlo Risk 202
Risk i Portfolio o t xt 211
lc l ti g t o ffici ts 223
T R l tio s ip tw Risk d R t s of R t r 226
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T ęPM Risk d R t r : �s Som t i g Missi g? 231
S mm ry 232
W b xt nsions
6ę: o ti o s Pro ility istri tio s
6 : lc l ti g t o ffici ts wit i ci l lc l tor
Ch pt r 7
Portfolio T ory d Ot r ęss t Prici g Mod ls 241
�ffici t Portfolios 242
0

oosi g t Optim l Portfolio 246
T sic ęss mptio s of t pit l ęss t Prici g Mod l 249
T pit l M rk t Li d t S c rity M rk t Li 250
lc l ti g t o ffici ts 255
�mpiric l T sts of t ęPM 262
ęr itr g Prici g T ory 264
T m  r c T r  ctor Mod l 267
ę ęlt r tiv T ory of Risk d R t r : vior l i c 270
S mm ry 272
Ch pt r
Stocks Stock V l tio d Stock M rk t �q ili ri m 280
L g l Rig ts d Privil g s of ommo Stock old rs 281
0

Typ s of ommo Stock 282
V l i g Stocks T t H v �o co st t Growt R t 293
Stock V l tio y t r s low ęppro c 296
M rk t M ltipl ę lysis 297
Pr f rr d Stock 297
Stock M rk t �q ili ri m 298
T �ffici t M rk ts Hypot sis 301
S mm ry 305
W b xt nsion
8ę: riv tio of V l tio �q tio s
Ch pt r
i ci l Optio s d ępplic tio s i orpor t i c 313
i ci l Optio s 314
0
0

� trod ctio to Optio Prici g Mod ls: T i omi l ęppro c 320
T l ck Sc ol s Optio Prici g Mod l OPM 325
T V l tio of P t Optio s 330
ępplic tio s of Optio Prici g i orpor t i c 332
S mm ry 334
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W b xt nsion
9ę: T i omi l ęppro c
0

Ch pt r 10
T ost of pit l 340
T W ig t d ęv r g ost of pit l 341
0
0

ost of t rd 1 T 342
ost of Pr f rr d Stock rps 344
ost of ommo Stock rs 345
T ęPM ęppro c 346
ivid d i ld Pl s Growt  R t or isco t d s low ęppro c 352
o d i ld Pl s Risk Pr mi m ęppro c 355
omp riso of t ęPM d o d i ld Pl s Risk Pr mi m M t ods 355
ęd sti g t ost of Stock for lot tio osts 356
omposit or W ig t d ęv r g ost of pit l Wę 358
0
0
0

ctors T t ęff ct t W ig t d ęv r g ost of pit l 360
ęd sti g t ost of pit l for Risk 361
Priv t ly Ow d irms d Sm ll si ss s 364
o r Mist k s to ęvoid 365
S mm ry 366
Ch pt r 11
T sics of pit l dg ti g: �v l ti g s lows 377
Ov rvi w of pit l dg ti g 378
0
0

� t Pr s t V l �PV 380
� t r l R t of R t r �RR 382
omp riso of t �PV d �RR M t ods 384
M ltipl �RRs 387
Modifi d � t r l R t of R t r M�RR 389
Profit ility � d x 391
P y ck M t ods 391
o cl sio s o pit l dg ti g M t ods 394
si ss Pr ctic s 396
Sp ci l ępplic tio s of s low �v l tio 397
T Optim l pit l dg t 400
S mm ry 402
W b xt nsions
11ę: T ęcco ti g R t of R t r ęRR
11 : T M rgi l ost of pit l d t Optim l pit l dg t
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Ch pt r 12
s low �stim tio d Risk ę lysis 415
�stim ti g s lows 416
0
0
0

Pro ct ę lysis: ę �x mpl 418
�ss s i Pro ct ę lysis 423
pr ci tio 426
ęd sti g for � fl tio 429
Pro ct Risk ę lysis: T c iq s for M s ri g St d ęlo Risk 431
0

Pro ct Risk o cl sio s 440
� corpor ti g Pro ct Risk i to pit l dg ti g 441
M gi g Risk t ro g P s d cisio s: cisio Tr s 441
� trod ctio to R l Optio s 444
S mm ry 446
W b xt nsions
12ę: R pl c m t Pro ct ę lysis
12 : rt i ty �q iv l ts d Risk ęd st d isco t R t s
Ch pt r 1
R l Optio s 457
V l i g R l Optio s 458
T � v stm t Timi g Optio : ę �ll str tio 459
T Growt Optio : ę �ll str tio 470
13ę: T ę do m t R l Optio
13 : Risk � tr l V l tio
0

Ch pt r 14
i ci l Pl i g d or c sti g i ci l St t m ts 486
Ov rvi w of i ci l Pl i g 487
0
0
0

S l s or c st 489
T ę � orm l 491
T or c st d i ci l St t m t S M t od 493
or c sti g i ci l R q ir m ts W t l c S t R tios ęr S ct to
g 505
S mm ry 508
W b xt nsions
14ę: i ci g d cks
14 : ędv c d T c iq s for or c sti g i ci l St t m ts ęcco ts
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Ch pt r 1
orpor t V l tio V l  s d M g m t d orpor t Gov r c 517
Ov rvi w of orpor t V l tio 518
0

T orpor t V l tio Mod l 519
V l  s d M g m t 528
0

M g ri l vior d S r old r W lt 537
orpor t Gov r c 538
0

' 0

�mploy Stock Ow rs ip Pl s �SOPs 548
S mm ry 551
Ch pt r 1
pit l Str ct r cisio s: T sics 564
ęPr vi w of pit l Str ct r �ss s 565
0
0

si ss Risk d i ci l Risk 567
pit l Str ct r T ory 574
W b xt nsion
16ę: gr of L v r g
Ch pt r 17
pit l Str ct r cisio s: �xt sio s 606
pit l Str ct r T ory: ęr itr g Proofs of t Modigli i Mill r Mod ls 607
0
0

� trod ci g P rso l T x s: T Mill r Mod l 617
riticisms of t MM d Mill r Mod ls 620
ę �xt sio to t MM Mod l: �o z ro Growt d Risky T x S i ld 622
Risky t d �q ity s Optio 626
pit l Str ct r T ory: O r Vi w 630
S mm ry 632
Ch pt r 1
istri tio s to S r old rs: ivid ds d R p rc s s 639
T L v l of istri tio s d irm V l 640
0
0

0
0

li t l �ff ct 645
Cop righ 2008 Thomson L arning n . All Righ s R s r 
.
Ma no b opi 
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� form tio o t t or Sig li g Hypot sis 646
�mplic tio s for ivid d St ility 647
S tti g t T rg t istri tio L v l: T R sid l istri tio Mod l 647
istri tio s i t orm of ivid ds 651
istri tio s t ro g Stock R p rc s s 653
omp riso of ivid ds d R p rc s s 657
Ot r ctors � fl ci g istri tio s 659
Ov rvi w of t istri tio Policy cisio 660
Stock Splits d Stock ivid ds 662
ivid d R i v stm t Pl s 664
S mm ry 665
0

Ch pt r 1
� iti l P lic Off ri gs � v stm t ki g d i ci l R str ct ri g 674
T i ci l Lif ycl of St rt p omp y 675
0
' 0

T cisio to Go P lic: � iti l P lic Off ri gs 676
T Proc ss of Goi g P lic 678
�q ity rv  O ts: ęSp ci l Typ of �PO 686
�o  �PO � v stm t ki g ęctiviti s 688
T cisio to Go Priv t 691
M gi g t M t rity Str ct r of t 693
S mm ry 706
W b xt nsion
19ę: Rig ts Off ri gs
Ch pt r 20
L s i ci g 714
Typ s of L s s 715
T x �ff cts 718
i ci l St t m t �ff cts 719
�v l tio y t L ss 721
�v l tio y t L ssor 726
Ot r �ss s i L s ę lysis 729
Ot r R so s for L si g 732
S mm ry 734
W b xt nsions
20ę: P rc t g ost ę lysis
20 : L si g d ck
20 : L v r g d L s s
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Ch pt r 21
Hy rid i ci g: Pr f rr d Stock W rr ts d o v rti l s 742
Pr f rr d Stock 743
' ' ' 0

W rr ts 748
o v rti l S c riti s 754
ę i l omp riso of W rr ts d o v rti l s 762
R porti g � r i gs W W rr ts or o v rti l s ęr O tst di g 763
S mm ry 764
W b xt nsion
21ę: lli g o v rti l �ss s
0

Ch pt r 22
Worki g pit l M g m t 774
T s o v rsio ycl 775
0
0

ęlt r tiv � t Op r ti g Worki g pit l Polici s 780
s M g m t 781
T s dg t 782
ęccr ls d ęcco ts P y l Tr d r dit 794
ęlt r tiv S ort T rm i ci g Polici s 797
S ort T rm � v stm ts: M rk t l S c riti s 799
S ort T rm i ci g 800
S ort T rm k Lo s 801
omm rci l P p r 803
Us of S c rity i S ort T rm i ci g 804
S mm ry 805
W b xt nsion
22ę: S c r d S ort T rm i ci g
Ch pt r 2
riv tiv s d Risk M g m t 818
R so s to M g Risk 819
0

ckgro d o riv tiv s 822
riv tiv s i t � ws 824
Ot r Typ s of riv tiv s 827
orpor t Risk M g m t 834
0

Cop righ 2008 Thomson L arning n . All Righ s R s r 
.
Ma no b opi 
s ann 
or 
pli a 
in hol or in par .
Licensed to: [e-mail]
Usi g riv tiv s to R d c Risks 837
S mm ry 845
W b xt nsion
23ę: Risk M g m t wit � s r c
Ch pt r 24
kr ptcy R org iz tio d Liq id tio 851
i ci l istr ss d �ts o s q c s 852
�ss s ci g irm i i ci l istr ss 854
S ttl m ts wit o t Goi g t ro g orm l kr ptcy 854
d r l kr ptcy L w 857
R org iz tio i kr ptcy 858
Liq id tio i kr ptcy 867
Ot r Motiv tio s for kr ptcy 871
Som riticisms of kr ptcy L ws 872
Ot r Topics i kr ptcy 873
S mm ry 873
W b xt nsions
24ę: ę tomi s of Two si ss il r s
24 : M ltipl iscrimi t ę lysis
Ch pt r 2
M rg rs L Os iv stit r s d Holdi g omp i s 881
M rg r R g l tio 888
Ov rvi w of M rg r ę lysis 890
T ęd st d Pr s t V l ęPV ęppro c 891
T r s low to �q ity � ęppro c 894
�ll str tio of t T r V l tio ęppro c s for o st t pit l Str ct r 896
S tti g t id Pric 901
ę lysis W T r �s P rm t g i pit l Str ct r 902
T x s d t Str ct r of t T k ov r id 904
i ci l R porti g for M rg rs 908
ę lysis for Tr o solid tio  910
T Rol of � v stm t k rs 911
W o Wi s: T �mpiric l �vid c 914
orpor t ęlli c s 916
L v r g d yo ts 917
iv stit r s 918
Holdi g omp i s 920
S mm ry 921
W b xt nsion
25ę: Pro cti g o sist t t d � t r st �xp s s
Cop righ 2008 Thomson L arning n . All Righ s R s r 
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Ch pt r 2
M lti tio l i ci l M g m t 929
M lti tio l or Glo l orpor tio s 930
M lti tio l v rs s om stic i ci l M g m t 931
�xc g R t s 933
�xc g R t s d � t r tio l Tr d 936
T � t r tio l Mo t ry Syst m d �xc g R t Polici s 938
Tr di g i or ig �xc g 942
� t r st R t P rity 943
P rc si g Pow r P rity 945
� fl tio � t r st R t s d �xc g R t s 948
� t r tio l Mo y d pit l M rk ts 949
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M lti tio l pit l dg ti g 952
� t r tio l pit l Str ct r s 956
M lti tio l Worki g pit l M g m t 958
S mm ry 961
�pp ndix �
Sol tio s to S lf T st Pro l ms 969
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V l s of t ęr s d r t St d rd �orm l istri tio ctio 1026
Gloss ry 1027
N m Ind x 1046
S bj ct Ind x 1050
Ch pt r 27
Providi g d O t i i g r dit
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ędv c d �ss s i s M g m t d � v tory o trol
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P sio Pl M g m t
Ch pt r 0
i ci l M g m t i �ot for Profit si ss s
Cop righ 2008 Thomson L arning n . All Righ s R s r 
.
Ma no b opi 
s ann 
or 
pli a 
in hol or in par .
Cop righ 2008 Thomson L arning n . All Righ s R s r 
.
Ma no b opi 
s ann 
or 
pli a 
in hol or in par .