公司财务与金融+英文.ppt

CHAPTER1OverviewofCorporateFinanceandtheFinancialEnvironment CorporatefinanceFormsofbusinessorganizationObjectiveofthefirm MaximizewealthDeterminantsofstockpricingThefinancialenvironmentFinancialinstruments marketsandinstitutionsInterestratesandyieldcurves Whyiscorporatefinanceimportanttoallmanagers Corporatefinanceprovidestheskillsmanagersneedto Identifyandselectthecorporatestrategiesandindividualprojectsthataddvaluetotheirfirm Forecastthefundingrequirementsoftheircompany anddevisestrategiesforacquiringthosefunds SoleproprietorshipPartnershipCorporation Whataresomeformsofbusinessorganization Advantages EaseofformationSubjecttofewregulationsNocorporateincometaxesDisadvantages LimitedlifeUnlimitedliabilityDifficulttoraisecapital SoleProprietorship Apartnershiphasroughlythesameadvantagesanddisadvantagesasasoleproprietorship Partnership Advantages UnlimitedlifeEasytransferofownershipLimitedliabilityEaseofraisingcapitalDisadvantages DoubletaxationCostofset upandreportfiling Corporation Theprimaryobjectiveshouldbeshareholderwealthmaximization whichtranslatestomaximizingstockprice Shouldfirmsbehaveethically YES Dofirmshaveanyresponsibilitiestosocietyatlarge YES Shareholdersarealsomembersofsociety Whatshouldmanagement sprimaryobjectivebe Ismaximizingstockpricegoodforsociety employees andcustomers Employmentgrowthishigherinfirmsthattrytomaximizestockprice Onaverage employmentgoesupin firmsthatmakemanagersintoowners suchasLBOfirms firmsthatwereownedbythegovernmentbutthathavebeensoldtoprivateinvestors Consumerwelfareishigherincapitalistfreemarketeconomiesthanincommunistorsocialisteconomies Fortuneliststhemostadmiredfirms Inadditiontohighstockreturns thesefirmshave highqualityfromcustomers viewemployeeswholikeworkingthere AmountofcashflowsexpectedbyshareholdersTimingofthecashflowstreamRiskofthecashflows Whatthreefactorsaffectstockprices SalesrevenuesCurrentlevelShort termgrowthrateinsalesLong termsustainablegrowthrateinsalesOperatingexpenses e g rawmaterials labor etc Necessaryinvestmentsinoperatingcapital e g buildings machines inventory etc Whatfactorsdetermineofcashflows Whatfactorsaffectthelevelandriskofcashflows Decisionsmadebyfinancialmanagers Investmentdecisions productlines productionprocesses geographicmarket useoftechnology marketingstrategy etc Financingdecisions choiceofdebtpolicyanddividendpolicy Theexternalenvironment taxes regulation etc Whatarefinancialassets Afinancialassetisacontractthatentitlestheownertosometypeofpayoff DebtEquityDerivativesIngeneral eachfinancialassetinvolvestwoparties aproviderofcash i e capital andauserofcash Whataresomefinancialinstruments InstrumentRate 9 01 U S T bills2 3 Banker sacceptances2 6Commercialpaper2 4NegotiableCDs2 5Eurodollardeposits2 5CommercialloansTiedtoprime 6 0 orLIBOR 2 6 More FinancialInstruments Continued InstrumentRate 9 01 U S T notesandT bonds5 5 Mortgages6 8Municipalbonds5 1Corporate AAA bonds7 2Preferredstocks7to9 Commonstocks expected 10to15 Whoaretheproviders savers andusers borrowers ofcapital Households NetsaversNon financialcorporations Netusers borrowers Governments NetborrowersFinancialcorporations Slightlynetborrowers butalmostbreakeven Directtransfer e g corporationissuescommercialpapertoinsurancecompany Throughaninvestmentbankinghouse e g IPO seasonedequityoffering ordebtplacement Throughafinancialintermediary e g individualdepositsmoneyinbank bankmakescommercialloantoacompany Whatarethreewaysthatcapitalistransferredbetweensaversandborrowers CommercialbanksSavings Loans mutualsavingsbanks andcreditunionsLifeinsurancecompaniesMutualfundsPensionfunds Whataresomefinancialintermediaries TheTop5BankingCompaniesintheWorld 12 1999 Whataresometypesofmarkets Amarketisamethodofexchangingoneasset usuallycash foranotherasset Physicalassetsvs financialassetsSpotversusfuturemarketsMoneyversuscapitalmarketsPrimaryversussecondarymarkets Howaresecondarymarketsorganized By location PhysicallocationexchangesComputer telephonenetworksBythewaythatordersfrombuyersandsellersarematchedOpenoutcryauctionDealers i e marketmakers Electroniccommunicationsnetworks ECNs PhysicalLocationvs Computer telephoneNetworks Physicallocationexchanges e g NYSE AMEX CBOT TokyoStockExchangeComputer telephone e g Nasdaq governmentbondmarkets foreignexchangemarkets AuctionMarkets NYSEandAMEXarethetwolargestauctionmarketsforstocks NYSEisamodifiedauction witha specialist Participantshaveaseatontheexchange meetface to face andplaceordersforthemselvesorfortheirclients e g CBOT Marketordersvs limitorders DealerMarkets Dealers keepaninventoryofthestock orotherfinancialasset andplacebidandask advertisements whicharepricesatwhichtheyarewillingtobuyandsell Computerizedquotationsystemkeepstrackofbidandaskprices butdoesnotautomaticallymatchbuyersandsellers Examples NasdaqNationalMarket NasdaqSmallCapMarket LondonSEAQ GermanNeuerMarkt ElectronicCommunicationsNetworks ECNs ECNs Computerizedsystemmatchesordersfrombuyersandsellersandautomaticallyexecutestransaction Examples Instinet US stocks Eurex Swiss German futurescontracts SETS London stocks OvertheCounter OTC Markets Intheolddays securitieswerekeptinasafebehindthecounter andpassed overthecounter whentheyweresold NowtheOTCmarketistheequivalentofacomputerbulletinboard whichallowspotentialbuyersandsellerstopostanoffer NodealersVerypoorliquidity Whatdowecalltheprice orcost ofdebtcapital TheinterestrateWhatdowecalltheprice orcost ofequitycapital RequiredDividendCapitalreturnyieldgain Whatfourfactorsaffectthecostofmoney ProductionopportunitiesTimepreferencesforconsumptionRiskExpectedinflation RealversusNominalRates r r IP DRP LP MRP Here r Requiredrateofreturnonadebtsecurity r Realrisk freerate IP Inflationpremium DRP Defaultriskpremium LP Liquiditypremium MRP Maturityriskpremium PremiumsAddedtor forDifferentTypesofDebt STTreasury onlyIPforSTinflationLTTreasury IPforLTinflation MRPSTcorporate STIP DRP LPLTcorporate IP DRP MRP LP Whatisthe termstructureofinterestrates Whatisa yieldcurve Termstructure therelationshipbetweeninterestrates oryields andmaturities Agraphofthetermstructureiscalledtheyieldcurve HowcanyouconstructahypotheticalTreasuryyieldcurve Estimatetheinflationpremium IP foreachfutureyear Thisistheestimatedaverageinflationoverthattimeperiod Step2 Estimatethematurityriskpremium MRP foreachfutureyear Step1 Findtheaverageexpectedinflationrateoveryears1ton n INFLtt 1n IPn Assumeinvestorsexpectinflationtobe5 nextyear 6 thefollowingyear and8 peryearthereafter IP1 5 1 0 5 00 IP10 5 6 8 8 10 7 5 IP20 5 6 8 18 20 7 75 MustearntheseIPstobreakevenversusinflation thatis theseIPswouldpermityoutoearnr beforetaxes Step2 FindMRPbasedonthisequation MRPt 0 1 t 1 MRP1 0 1 x0 0 0 MRP10 0 1 x9 0 9 MRP20 0 1 x19 1 9 AssumetheMRPiszeroforYear1andincreasesby0 1 eachyear Step3 AddtheIPsandMRPstor rRFt r IPt MRPt rRF Quotedmarketinterestrateontreasurysecurities Assumer 3 rRF1 3 5 0 0 8 0 rRF10 3 7 5 0 9 11 4 rRF20 3 7 75 1 9 12 65 HypotheticalTreasuryYieldCurve 0 5 10 15 1 10 20 YearstoMaturity InterestRate 1yr8 0 10yr11 4 20yr12 65 Realrisk freerate Inflationpremium Maturityriskpremium Whatfactorscanexplaintheshapeofthisyieldcurve Thisconstructedyieldcurveisupwardsloping Thisisduetoincreasingexpectedinflationandanincreasingmaturityriskpremium WhatkindofrelationshipexistsbetweentheTreasuryyieldcurveandtheyieldcurvesforcorporateissues CorporateyieldcurvesarehigherthanthatoftheTreasurybond However corporateyieldcurvesarenotneces sarilyparalleltotheTreasurycurve ThespreadbetweenacorporateyieldcurveandtheTreasurycurvewidensasthecorporatebondratingdecreases HypotheticalTreasuryandCorporateYieldCurves 0 5 10 15 0 1 5 10 15 20 Yearstomaturity InterestRate 5 2 5 9 6 0 Treasuryyieldcurve WhatisthePureExpectationsHypothesis PEH Shapeoftheyieldcurvedependsontheinvestors expectationsaboutfutureinterestrates Ifinterestratesareexpectedtoincrease L TrateswillbehigherthanS Tratesandviceversa Thus theyieldcurvecanslopeupordown PEHassumesthatMRP 0 Long termratesareanaverageofcurrentandfutureshort termrates IfPEHiscorrect youcanusetheyieldcurveto backout expectedfutureinterestrates ObservedTreasuryRates IfPEHholds whatdoesthemarketexpectwillbetheinterestrateonone yearsecurities oneyearfromnow Three yearsecurities twoyearsfromnow 0 1 2 5 6 0 3 4 x 6 2 PEHtellsusthatone yearsecuritieswillyield6 4 oneyearfromnow x 6 2 12 4 6 0 x 6 4 x 6 0 x 2 0 1 2 5 6 2 3 4 x 6 5 2 6 2 3 x 5 PEHtellsusthatthree yearsecuritieswillyield6 7 twoyearsfromnow x 6 5 32 5 12 4 3 x 20 1 3 x 6 7 x SomearguethatthePEHisn tcorrect becausesecuritiesofdifferentmaturitieshavedifferentrisk Generalview supportedbymostevidence isthatlenderspreferS Tsecurities andviewL Tsecuritiesasriskier Thus investorsdemandaMRPtogetthemtoholdL Tsecurities i e MRP 0 ConclusionsaboutPEH Whatvarioustypesofrisksarisewheninvestingoverseas Countryrisk Arisesfrominvestingordoingbusinessinaparticularcountry Itdependsonthecountry seconomic political andsocialenvironment Exchangeraterisk Ifinvestmentisdenominatedinacurrencyotherthanthedollar theinvestment svaluewilldependonwhathappenstoexchangerate Whattwofactorsleadtoexchangeratefluctuations Changesinrelativeinflationwillleadtochangesinexchangerates Anincreaseincountryriskwillalsocausethatcountry scurrencytofall FuturevaluePresentvalueRatesofreturnAmortization Chapter2TimeValueofMoney Timelinesshowtimingofcashflows CF0 CF1 CF3 CF2 0 1 2 3 i Tickmarksatendsofperiods soTime0istoday Time1istheendofPeriod1 orthebeginningofPeriod2 Timelinefora 100lumpsumdueattheendofYear2 100 0 1 2Year i Timelineforanordinaryannuityof 100for3years 100 100 100 0 1 2 3 i TimelineforunevenCFs 50att 0and 100 75 and 50attheendofYears1through3 100 50 75 0 1 2 3 i 50 What stheFVofaninitial 100after3yearsifi 10 FV 0 1 2 3 10 FindingFVs movingtotherightonatimeline iscalledcompounding 100 After1year FV1 PV INT1 PV PV i PV 1 i 100 1 10 110 00 After2years FV2 FV1 1 i PV 1 i 1 i PV 1 i 2 100 1 10 2 121 00 After3years FV3 FV2 1 i PV 1 i 2 1 i PV 1 i 3 100 1 10 3 133 10 Ingeneral FVn PV 1 i n ThreeWaystoFindFVs Solvetheequationwitharegularcalculator Useafinancialcalculator Useaspreadsheet Financialcalculator HP17BII Adjustdisplaycontrast holddownCLRandpush or Choosealgebramode Holddownorangekey i e theshiftkey hitMODES theshiftedDSPkey andselectALG Setnumberofdecimalplacestodisplay HitDSPkey selectFIX theninputdesireddecimalplaces e g 3 HP17BII Continued Setdecimalmode HitDSPkey selectthe insteadofthe Note manynon UScountriesreversetheUSuseofdecimalsandcommaswhenwritinganumber HP17BII SetTimeValueParameters HitEXITuntilyougetthemenustartingwithFIN SelectFIN SelectTVM SelectOTHER SelectP YR Input1 for1paymentperyear SelectEND forcashflowsoccuringattheendoftheyear Financialcalculatorssolvethisequation Thereare4variables If3areknown thecalculatorwillsolveforthe4th FinancialCalculatorSolution 310 1000NI YRPVPMTFV133 10 Here sthesetuptofindFV Clearingautomaticallysetseverythingto0 butforsafetyenterPMT 0 Set P YR 1 END INPUTS OUTPUT SpreadsheetSolution UsetheFVfunction seespreadsheetinCh02MiniCase xls FV Rate Nper Pmt PV FV 0 10 3 0 100 133 10 10 What sthePVof 100duein3yearsifi 10 FindingPVsisdiscounting andit sthereverseofcompounding 100 0 1 2 3 PV SolveFVn PV 1 i nforPV PV 100 1 1 10 100 0 7513 75 13 3 FinancialCalculatorSolution 3100100NI YRPVPMTFV 75 13 EitherPVorFVmustbenegative HerePV 75 13 Putin 75 13today takeout 100after3years INPUTS OUTPUT SpreadsheetSolution UsethePVfunction seespreadsheet PV Rate Nper Pmt FV PV 0 10 3 0 100 75 13 FindingtheTimetoDouble 20 2 0 1 2 1 FV PV 1 i n 2 1 1 0 20 n 1 2 n 2 1 2nLN 1 2 LN 2 n LN 2 LN 1 2 n 0 693 0 182 3 8 20 102NI YRPVPMTFV3 8 INPUTS OUTPUT FinancialCalculator SpreadsheetSolution UsetheNPERfunction seespreadsheet NPER Rate Pmt PV FV NPER 0 10 0 1 2 3 8 FindingtheInterestRate 2 0 1 2 3 1 FV PV 1 i n 2 1 1 i 3 2 1 3 1 i 1 2599 1 i i 0 2599 25 99 3 102NI YRPVPMTFV25 99 INPUTS OUTPUT FinancialCalculator SpreadsheetSolution UsetheRATEfunction RATE Nper Pmt PV FV RATE 3 0 1 2 0 2599 OrdinaryAnnuity PMT PMT PMT 0 1 2 3 i PMT PMT 0 1 2 3 i PMT AnnuityDue What sthedifferencebetweenanordinaryannuityandanannuitydue PV FV What stheFVofa3 yearordinaryannuityof 100at10 100 100 100 0 1 2 3 10 110121FV 331 FVAnnuityFormula Thefuturevalueofanannuitywithnperiodsandaninterestrateoficanbefoundwiththefollowingformula Financialcalculatorssolvethisequation Thereare5variables If4areknown thecalculatorwillsolveforthe5th FinancialCalculatorFormulaforAnnuities 3100 100331 00 N I YR PV PMT FV FinancialCalculatorSolution HavepaymentsbutnolumpsumPV soenter0forpresentvalue INPUTS OUTPUT SpreadsheetSolution UsetheFVfunction seespreadsheet FV Rate Nper Pmt Pv FV 0 10 3 100 0 331 00 What sthePVofthisordinaryannuity 100 100 100 0 1 2 3 10 90 91 82 64 75 13 248 69 PV PVAnnuityFormula Thepresentvalueofanannuitywithnperiodsandaninterestrateoficanbefoundwiththefollowingformula HavepaymentsbutnolumpsumFV soenter0forfuturevalue 3101000 N I YR PV PMT FV 248 69 INPUTS OUTPUT FinancialCalculatorSolution SpreadsheetSolution UsethePVfunction seespreadsheet PV Rate Nper Pmt Fv PV 0 10 3 100 0 248 69 FindtheFVandPViftheannuitywereanannuitydue 100 100 0 1 2 3 10 100 PVandFVofAnnuityDuevs OrdinaryAnnuity PVofannuitydue PVofordinaryannuity 1 i 248 69 1 0 10 273 56FVofannuitydue FVofordinaryannuity 1 i 331 00 1 0 10 364 1 3101000 273 55 N I YR PV PMT FV Switchfrom End to Begin ThenentervariablestofindPVA3 273 55 ThenenterPV 0andpressFVtofindFV 364 10 INPUTS OUTPUT ExcelFunctionforAnnuitiesDue Changetheformulato PV 10 3 100 0 1 Thefourthterm 0 tellsthefunctiontherearenoothercashflows Thefifthtermtellsthefunctionthatitisanannuitydue Asimilarfunctiongivesthefuturevalueofanannuitydue FV 10 3 100 0 1 WhatisthePVofthisunevencashflowstream 0 100 1 300 2 300 3 10 50 4 90 91 247 93 225 39 34 15 530 08 PV Inputin CFLO register CF0 0CF1 100CF2 300CF3 300CF4 50EnterI 10 thenpressNPVbuttontogetNPV 530 09 HereNPV PV SpreadsheetSolution ExcelFormulaincellA3 NPV 10 B2 E2 ABCDE1012342100300300 503530 09 Nominalrate iNom Statedincontracts andquotedbybanksandbrokers NotusedincalculationsorshownontimelinesPeriodsperyear m mustbegiven Examples 8 Quarterly8 Dailyinterest 365days Periodicrate iPer iPer iNom m wheremisnumberofcompoundingperiodsperyear m 4forquarterly 12formonthly and360or365fordailycompounding Usedincalculations shownontimelines Examples 8 quarterly iPer 8 4 2 8 daily 365 iPer 8 365 0 021918 WilltheFVofalumpsumbelargerorsmallerifwecompoundmoreoften holdingthestatedI constant Why LARGER Ifcompoundingismorefrequentthanonceayear forexample semiannually quarterly ordaily interestisearnedoninterestmoreoften FVFormulawithDifferentCompoundingPeriods e g 100ata12 nominalratewithsemiannualcompoundingfor5years 100 1 06 10 179 08 FV PV 1 i m n Nom mn FV 100 1 0 12 2 5S 2x5 FVof 100ata12 nominalratefor5yearswithdifferentcompounding FV Annual 100 1 12 5 176 23 FV Semiannual 100 1 06 10 179 08 FV Quarterly 100 1 03 20 180 61 FV Monthly 100 1 01 60 181 67 FV Daily 100 1 0 12 365 5x365 182 19 EffectiveAnnualRate EAR EFF TheEARistheannualratewhichcausesPVtogrowtothesameFVasundermulti periodcompoundingExample Invest 1foroneyearat12 semiannual FV PV 1 iNom m mFV 1 1 06 2 1 1236 EFF 12 36 because 1investedforoneyearat12 semiannualcompoundingwouldgrowtothesamevalueas 1investedforoneyearat12 36 annualcompounding Aninvestmentwithmonthlypaymentsisdifferentfromonewithquarterlypayments MustputonEFF basistocompareratesofreturn UseEFF onlyforcomparisons Bankssay interestpaiddaily Sameascompoundeddaily HowdowefindEFF foranominalrateof12 compoundedsemiannually 1 0 1 0 122 2 1 06 2 1 0 0 1236 12 36 FindingEFFwithHP17BII GotomenustartingTVM SelectICNV forint rateconversion SelectPER forperiodiccompounding EnternominalrateandselectNOM EnternumberofperiodsperyearandselectP SelectEFF whichreturnseffectiverate EAR orEFF foraNominalRateofof12 EARAnnual 12 EARQ 1 0 12 4 4 1 12 55 EARM 1 0 12 12 12 1 12 68 EARD 365 1 0 12 365 365 1 12 75 Cantheeffectiverateeverbeequaltothenominalrate Yes butonlyifannualcompoundingisused i e ifm 1 Ifm 1 EFF willalwaysbegreaterthanthenominalrate Wheniseachrateused iNom Writtenintocontracts quotedbybanksandbrokers Notusedincalculationsorshownontimelines iPer Usedincalculations shownontimelines IfiNomhasannualcompounding theniPer iNom 1 iNom Usedforcalculationsifandonlyifdealingwithannuitieswherepaymentsdon tmatchinterestcompoundingperiods EAR EFF Usedtocomparereturnsoninvestmentswithdifferentpaymentsperyear Amortization Constructanamortizationschedulefora 1 000 10 annualrateloanwith3equalpayments Step1 Findtherequiredpayments PMT PMT PMT 0 1 2 3 10 1 000 310 10000 INPUTS OUTPUT N I YR PV FV PMT 402 11 Step2 FindinterestchargeforYear1 INTt Begbalt i INT1 1 000 0 10 100 Step3 FindrepaymentofprincipalinYear1 Repmt PMT INT 402 11 100 302 11 Step4 FindendingbalanceafterYear1 Endbal Begbal Repmt 1 000 302 11 697 89 RepeatthesestepsforYears2and3tocompletetheamortizationtable Interestdeclines Taximplications BEGPRINENDYRBALPMTINTPMTBAL 1 1 000 402 100 302 6982698402703323663366402373660TOT1 206 34206 341 000 0 1 2 3 402 11 Interest 302 11 Levelpayments Interestdeclinesbecauseoutstandingbalancedeclines Lenderearns10 onloanoutstanding whichisfalling PrincipalPayments Amortizationtablesarewidelyused forhomemortgages autoloans businessloans retirementplans andsoon Theyareveryimportant Financialcalculators andspreadsheets aregreatforsettingupamortizationtables OnJanuary1youdeposit 100inanaccountthatpaysanominalinterestrateof11 33463 withdailycompounding 365days HowmuchwillyouhaveonOctober1 orafter9months 273days Daysgiven iPer 11 33463 365 0 031054 perday FV 0 1 2 273 0 031054 100 Note incalculator decimalinequation FV 100 1 00031054 100 1 08846 108 85 273 273 273 1000108 85 INPUTS OUTPUT N I YR PV FV PMT iPer iNom m 11 33463 365 0 031054 perday Enteriinonestep Leavedataincalculator What sthevalueattheendofYear3ofthefollowingCFstreamifthequotedinterestrateis10 compoundedsemiannually 0 1 100 2 3 5 4 5 66 mos periods 100 100 Paymentsoccurannually butcompoundingoccurseach6months Sowecan tusenormalannuityvaluatio