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Cover of Modern Corporate Finance: Theory and Practice v9.0
Published: 
March 2023
Page Count: 
650
ISBN (Digital): 
978-1-4533-3791-2

Modern Corporate Finance: Theory and Practice

Version 9.0
By Donald R. Chambers and Nelson J. Lacey

Included Supplements

Key Features

  • Concisely presents essential points of finance theory immediately reinforced by hands-on applications
  • Emphasizes the modernist movement
    • Provides structure and presentation that are readily understood by undergraduates
    • Based on systematic methodology, deductive reasoning, and empirical validation
    • Rooted in a market-value based approach that embraces shareholder wealth, options, and agency relationships
  • Accounting concepts are discussed later in the book
  • Rich Learning Structure
    • Chapter opening scenario showcases an engaging, real-world example of people and organizations who are grappling with business or personal finance questions and use finance to help them answer those questions
    • “Learning Objectives” preview each main head section and help focus the reader’s attention
    • Glossary of Key Terms. Highlighted key terms feature pop-up definitions when read online or a marginal glossary when printed
    • Embedded online quizzes and flashcards encourage students to assess their own learning as they read
    • New “Section” video lecture boxes embedded throughout highlight key Learning Objectives (3–5 per chapter on average)
    • “Example” boxes provide immediate application and reinforcement following the presentation of a core concept
    • “Windows” boxes provide extra details about topics being discussed “Workshop” boxes present step-by-step financial problem-solving approaches
  • End of Chapter
    • “Key Takeaways” summarize the chapter’s most important points
    • “Demonstration Problems” model step-by-step solutions
    • “Review Questions” encourage students to critically analyze and assimilate material learned in the preceding chapter.
    • “Problems” provide ample opportunities to apply what has just been learned.
    • “Discussion Questions” prompt in-class or message board interactions to facilitate peer learning and help faculty make informal assessments.
  • FlatWorld Homework includes an average of 3–5 video tutorials per chapter that explain with visual aids the steps to solve in-text examples and key exercises from the chapter-end problem sets
  • Customizable

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Modern Corporate Finance: Theory and Practice is suitable for the following courses: Introduction to Corporate Finance, Corporate Finance, Introduction to Financial Management, Financial management or similar titles taught at the undergraduate and graduate levels at two- and four-year colleges and universities.

Modern Corporate Finance combines a forward-looking vision of corporate finance with tried-and-true best practices that fill a void in contemporary teaching materials. Through its clear and concise approach, the authors emphasize the modernist movement in finance. This approach is based on systematic methodology that emphasizes deductive reasoning and empirical validation. This version now includes video mini-lectures at strategic learning points throughout each chapter, video tutorials to help learners better understand the steps involved in solving example problems, and a completely restructured and refreshed set of instructor and student supplements.

 

New in This Version

  • More than 130 instructional videos recorded specifically for this version are embedded throughout
    • More than 70 narrated lecture videos explain the most important concepts from each chapter (3–5 per chapter on average)
    • More than 60 demonstration problem videos provide step-by-step instructions on how to solve textbook problems. The videos provide both an audio and video explanation of demonstration problems
    • More than 20 Excel solutions to sample problems. Excel files provide a textual explanation of how to solve the demonstration problem and also provide an explanation of Excel formulas and parameters used in the Excel solution. The Excel solutions extend a student's understanding of the financial concepts while also demonstrating how to set up a spreadsheet model to solve finance problems.
  • Time-specific content updated throughout the text, including both descriptive changes and data tables in the following: the Preface, Figure 1.2, Figure 1.4, Table 1.1, Table 2.2, Window 3.3, Figure 5.3, Table 12.1, Table 13.1, Table 14.4, Table 16.3, Example 19.1, Figure 19.1, and Figure 20.1
  • New Example 9.3 (real call and real put options) that also includes two new figures (9.11 and 9.12)
  • New Workshop 19.1 (demystifying the interest rate parity theorem)
  • New Table 19.6 (examples of interest rate parity)
  • PowerPoint lecture slides are now more concise and visually organized
  • About the Authors
  • Acknowledgments
  • Dedication
  • Preface

    • Chapter 1: Introduction to Modern Corporate Finance

  • 1.1 Modern Corporate Finance
  • 1.2 What Is Finance?
  • 1.3 Defining the Corporation
  • 1.4 What Is Meant by Modern?
  • 1.5 The Goal or Purpose of the Corporation
  • 1.6 Economic Foundations of Finance
  • 1.7 Time and Risk
  • 1.8 End-of-Chapter Material

    • Chapter 2: Markets and Contracts

  • 2.1 Market Efficiency
  • 2.2 Inefficient Markets
  • 2.3 Acquiring Assets in the Financial System
  • 2.4 Real versus Financial Assets
  • 2.5 Asset Ownership Through Financial Intermediation
  • 2.6 Markets
  • 2.7 Contracting
  • 2.8 End-of-Chapter Material

    • Chapter 3: Corporate Ethics and Shareholder Wealth Maximization

  • 3.1 Corporate Ethics Introduced
  • 3.2 Can Corporations Act Ethically?
  • 3.3 Two Approaches to Corporate Ethics
  • 3.4 The Contractual-Rights Approach to Corporate Ethics
  • 3.5 The Societal-Good Approach to Corporate Ethics
  • 3.6 Debating the Two Approaches to Corporate Ethics
  • 3.7 Unrequired Behavior versus Required Behavior: “Oughttas” versus “Gottas”
  • 3.8 Personal versus Public-Policy Debates
  • 3.9 Public-Policy Ethical Decisions
  • 3.10 Corporate Ethics and Shareholder Wealth Maximization
  • 3.11 Corporate Ethics and Market Values
  • 3.12 End-of-Chapter Material
  • 3.13 Appendix: Overview in the History of the Philosophy of Ethics and Economics
  • 3.14 Appendix: The Origin of Individual Rights

    • Chapter 4: The Time Value of Money

  • 4.1 Time Value
  • 4.2 Dollars Through Time as Different Commodities
  • 4.3 Discounting Cash Flows
  • 4.4 Compounding Cash Flows
  • 4.5 The Techniques of Discounting and Compounding
  • 4.6 The Time Value for More than One Cash Flow
  • 4.7 The Present Value of Annuities
  • 4.8 Beginning and Ending Payments
  • 4.9 The Future Value of an Annuity
  • 4.10 Solving for the Interest Rate
  • 4.11 Solving for the Time Period
  • 4.12 End-of-Chapter Material

    • Chapter 5: The Valuation of Financial Securities

  • 5.1 Review of Discounting Annuities
  • 5.2 Financial Securities
  • 5.3 The Valuation of Common Stock
  • 5.4 End-of-Chapter Material

    • Chapter 6: Introduction to Options

  • 6.1 The Importance of Option Theory
  • 6.2 The Mechanics of Options
  • 6.3 Who Pays the Profits to Call Option Buyers?
  • 6.4 The Black-Scholes Option Pricing Model
  • 6.5 Option Pricing—A Two-State Example
  • 6.6 An Application of Option Theory to the Equity of a Firm
  • 6.7 End-of-Chapter Material
  • 6.8 Appendix: The Black-Scholes Option Pricing Model

    • Chapter 7: The Techniques of Capital Budgeting

  • 7.1 Creating Value
  • 7.2 Net Present Value
  • 7.3 Competitors of NPV
  • 7.4 NPV versus IRR—Which Method Is Better?
  • 7.5 Project Selection and the Required Rate of Returns
  • 7.6 End-of-Chapter Material

    • Chapter 8: Estimating Project Cash Flows

  • 8.1 Estimating Project Cash Flows
  • 8.2 Estimating Cash Flow and NPV for Project Wivo
  • 8.3 Errors in Project Cash Flow Estimation
  • 8.4 Sensitivity Analysis
  • 8.5 End-of-Chapter Material

    • Chapter 9: Real Options

  • 9.1 Real Options
  • 9.2 Decision Trees
  • 9.3 Why a Traditional NPV Can Fail
  • 9.4 End-of-Chapter Material

    • Chapter 10: Advanced Topics in Capital Budgeting

  • 10.1 Overview—Complexities in Capital Budgeting Analysis
  • 10.2 Projects with Unequal Lives
  • 10.3 Least-Cost Decisions
  • 10.4 Inflation and Investment Decisions
  • 10.5 Capital Rationing
  • 10.6 End-of-Chapter Material
  • 10.7 Appendix: Integer Linear Programming

    • Chapter 11: Risk and Diversification

  • 11.1 Return and Risk on Individual Assets
  • 11.2 Return and Risk on Portfolios
  • 11.3 The Normal Distribution
  • 11.4 Return and Risk on Portfolios
  • 11.5 A First Look at Portfolio Risk
  • 11.6 End-of-Chapter Material

    • Chapter 12: Modern Portfolio Theory and the Capital Asset Pricing Model

  • 12.1 Portfolio Management Theory
  • 12.2 Beta
  • 12.3 The CAPM and Capital Budgeting
  • 12.4 End-of-Chapter Material
  • 12.5 Appendix: Why Expected Returns Lie in a Straight Line Against Beta

    • Chapter 13: Financial Leverage

  • 13.1 An Introduction to Corporate Financing
  • 13.2 An Overview of Corporate Financing
  • 13.3 The Mechanics of Financial Leverage
  • 13.4 Capital Structure and Firm Value—The Traditionalists’ View
  • 13.5 Capital Structure and Firm Value—The Modernists’ View
  • 13.6 End-of-Chapter Material

    • Chapter 14: Financing: Why Might it Matter

  • 14.1 The Rationale for Capital Structure Relevance
  • 14.2 Capital Structure with Corporate Taxes
  • 14.3 The Miller Tax Model
  • 14.4 Bankruptcy and Capital Structure
  • 14.5 Transactions Costs, Agency Costs, and Information Signaling
  • 14.6 End-of-Chapter Material

    • Chapter 15: The Dividend Decision

  • 15.1 An Overview of the Firm’s Dividend Decision
  • 15.2 The Traditionlists’ View of Cash Dividends
  • 15.3 The Modernists’ Viewpoint—The M&M Model without Taxes
  • 15.4 Market Imperfections and Dividend Policy
  • 15.5 The Miller Tax Model
  • 15.6 Summary of the Two Tax Models for Dividends
  • 15.7 Dividends and Bankruptcy
  • 15.8 Dividends and Information Signaling
  • 15.9 Stock Dividends and Stock Splits
  • 15.10 End-of-Chapter Material

    • Chapter 16: Financial Analysis

  • 16.1 Two Views of Financial Analysis
  • 16.2 Financial Statements
  • 16.3 Ratio Analysis
  • 16.4 Statement of Cash Flows
  • 16.5 End-of-Chapter Material

    • Chapter 17: Working Capital Management

  • 17.1 An Overview of Working Capital Management
  • 17.2 Current Asset Management
  • 17.3 Current Liability Management
  • 17.4 End-of-Chapter Material

    • Chapter 18: Corporate Financial Planning

  • 18.1 Short-Term Financial Planning and the Cash Budget
  • 18.2 Cash Forecasting
  • 18.3 Long-Range Financial Planning
  • 18.4 End-of-Chapter Material

    • Chapter 19: International Finance

  • 19.1 An Overview of International Finance
  • 19.2 The Economics of Multiple Currencies
  • 19.3 Multiple Currencies and the Passage of Time
  • 19.4 Multiple Currencies with Time and Risk
  • 19.5 Political Risk
  • 19.6 Practical Considerations of International Financial Managment
  • 19.7 End-of-Chapter Material

    • Chapter 20: Mergers and Other Reorganizations

  • 20.1 The Market for Corporate Control
  • 20.2 The Traditional View of Corporate Reorganizations
  • 20.3 The Modernists’ View of Mergers
  • 20.4 Divestitures and Liquidations
  • 20.5 End-of-Chapter Material

    • Chapter 21: Financial Engineering

  • 21.1 An Overview of Financial Engineering
  • 21.2 Environmental Risk and Core Business Risk
  • 21.3 Risk Exposure Profiles
  • 21.4 Combining Risk Exposure Profiles: An Introduction
  • 21.5 The Use of Derivatives in Financial Engineering
  • 21.6 Financial Engineering and Financial Theory
  • 21.7 End-of-Chapter Material
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    Instructor’s Manual

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    Donald R. Chambers Lafayette College

    Don Chambers (PhD University of North Carolina at Chapel Hill) is Emeritus Professor of Finance at Lafayette College in Easton and Chief Investment Officer at Biltmore Capital Advisors. Don has published over fifty articles and several books in investments, corporate finance and risk management. Most recently, he co-authored Alternative Investments, which is used by the CAIA organization (the Chartered Alternative Investment Association) in its charter program where he serves as the Associate Director of Programs. Previously, he served at The Bank of New York on a consulting basis and Karpus Investment Management of Pittsford, NY in various roles including Director of Alternative Investments and Director of Equities.

    Nelson J. Lacey University of Massachusetts - Amherst

    Nelson Lacey (PhD The Pennsylvania State Univesity) is Emeritus Professor of Finance at the Isenberg School of Management at the University of Massachusetts. Nelson's academic work has led to over fifty publications in finance and economics. He was part of a consortium of academics that assisted in the establishment of a business school at the Jagiellonian University in Krakow Poland in the early 1990s. He has held visiting teaching positions in places such as Poland, Greece, and Portugal. Nelson currently serves as the Director of Examinations for the Chartered Alternative Investment Analyst Association (CAIA), a position he has held since 2004, and, as CAIA’s first Program Director, he was part of a small team that launched the Association.

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