公司理财培训教程(英文版)课件

公司理财培训教程(英文版)课件1-2CHAPTER1IntroductiontoCorporateFinance./sites/0072829206/student_view0/1-2CHAPTER1IntroductiontoCor1-3ChapterOutline1.1WhatisCorporateFinance?1.2CorporateSecuritiesasContingentClaimsonTotalFirmValue1.3TheCorporateFirm1.4GoalsoftheCorporateFirm1.5FinancialMarkets1.6OutlineoftheText1-3ChapterOutline1.1Whatis1-4WhatisCorporateFinance?

CorporateFinanceaddressesthefollowingthreequestions:Whatlong-terminvestmentsshouldthefirmengagein?Howcanthefirmraisethemoneyfortherequiredinvestments?Howmuchshort-termcashflowdoesacompanyneedtopayitsbills?1-4WhatisCorporateFinance? 1-5TheBalance-SheetModel

oftheFirmCurrentAssetsFixedAssets1Tangible2IntangibleTotalValueofAssets:Shareholders’EquityCurrentLiabilities

Long-TermDebtTotalFirmValuetoInvestors:1-5TheBalance-SheetModel

of1-6TheBalance-SheetModel

oftheFirmCurrentAssetsFixedAssets1Tangible2IntangibleShareholders’EquityCurrentLiabilities

Long-TermDebtWhatlong-terminvestmentsshouldthefirmengagein?TheCapitalBudgetingDecision1-6TheBalance-SheetModel

of1-7TheBalance-SheetModel

oftheFirmHowcanthefirmraisethemoneyfortherequiredinvestments?TheCapitalStructureDecisionCurrentAssetsFixedAssets1Tangible2IntangibleShareholders’EquityCurrentLiabilities

Long-TermDebt1-7TheBalance-SheetModel

of1-8TheBalance-SheetModel

oftheFirmHowmuchshort-termcashflowdoesacompanyneedtopayitsbills?TheNetWorkingCapitalInvestmentDecisionNetWorkingCapitalShareholders’EquityCurrentLiabilitiesCurrentAssetsFixedAssets1Tangible2Intangible

Long-TermDebt1-8TheBalance-SheetModel

of1-9CapitalStructureThevalueofthefirmcanbethoughtofasapie,itwilldependonhowwellthefirmhasmadeitsinvestmentdecisionThegoalofthemanageristoincreasethesizeofthepie.TheCapitalStructuredecisioncanbeviewedashowbesttosliceupathepie.Ifhowyouslicethepieaffectsthesizeofthepie,thenthecapitalstructuredecisionmatters.50%Debt50%Equity25%Debt75%Equity70%Debt30%Equity1-9CapitalStructureThevalue1-10HypotheticalOrganizationChartChairmanoftheBoardand

ChiefExecutiveOfficer(CEO)BoardofDirectorsPresidentandChief

OperatingOfficer(COO)VicePresidentand

ChiefFinancialOfficer(CFO)TreasurerControllerCashManagerCapitalExpendituresCreditManagerFinancialPlanningTaxManagerFinancialAccountingCostAccountingDataProcessing1-10HypotheticalOrganization1-11TheFinancialManagerTocreatevalue,thefinancialmanagershould:Trytomakesmartinvestmentdecisions.Trytomakesmartfinancingdecisions.1-11TheFinancialManagerTocr1-12Cashflow

fromfirm(C)TheFirmandtheFinancialMarketsTaxes(D)FirmGovernmentFirmissuessecurities(A)Retained

cashflows(F)Invests

inassets

(B)Dividendsand

debtpayments(E)Currentassets

FixedassetsFinancial

marketsShort-termdebtLong-termdebtEquitysharesUltimately,thefirmmustbeacashgeneratingactivity.Thecashflowsfromthefirmmustexceedthecashflowsfromthefinancialmarkets.1-12Cashflow

fromfirm(C)The1-13Multiplechoice1.Whichofthefollowingisnotconsideredoneofthebasicquestionsofcorporatefinance? A) Whatlong-livedassetsshouldthefirminvest? B) Howmuchinventoryshouldthefirmhold? C) Howcanthefirmraisecashforrequiredcapitalexpenditures? D) Howshouldtheshort-termoperatingcashflowsbemanaged? E) Alloftheabove.1-13Multiplechoice1.Whichof1-14Answer:B1-14Answer:B1-152.Thebalancesheetismadeupofwhatfivekeycomponents? A) Fixedassets,currentliabilities,longtermdebt,tangiblecurrentassetsandshareholdersequity B) Intangiblefixedassets,currentliabilities,long-termdebt,netincomeandcurrentassets C) Fixedassets,long-termdebt,currentassets,currentliabilitiesandshareholdersequity D) Currentassets,fixedassets,longtermdebt,shareholdersequityandretainedearnings E) Noneoftheabove.1-152.Thebalancesheetismad1-16Answer:C1-16Answer:C1-173.Capitalstructureisdefinedasthemajorfinancingofthefirm.Thecapitalstructureisdivided A) betweendebtorsandcreditors. B) creditorsandshareholders. C) assetsandliabilities. D) Alloftheabove. E) Noneoftheabove.1-173.Capitalstructureisde1-18Answer:B1-18Answer:B1-194.InthemanagerialstructureofthecorporationthetwoofficersandtheirresponsibilitiesthatreportdirectlytotheChiefFinancialOfficer(CFO)are A) thecreditmanagerwhohandlesaccountsreceivableandthetaxmanagerwhominimizestaxpayments. B) thepersonnelmanagerwhomanagessalariesandcompensation,andtheproductionoperationsmanagerwhomanagesfacilityoperations. C) thetreasurerwhoisresponsiblehandlingcashflowandmakingfinancialdecisionsandthetaxmanagerwhominimizestaxpayments. D) thecontrollerwhomanagestheaccountingfunctionandthetreasurerwhoisresponsiblehandlingcashflowandmakingfinancialdecisions.

E) Noneoftheabove.1-194.Inthemanagerialstruc1-20Answer:D1-20Answer:D1-211.2CorporateSecuritiesasContingentClaimsonTotalFirmValueThebasicfeatureofadebtisthatitisapromisebytheborrowingfirmtorepayafixeddollaramountofbyacertaindate.Theshareholder’sclaimonfirmvalueistheresidualamountthatremainsafterthedebtholdersarepaid.Ifthevalueofthefirmislessthantheamountpromisedtothedebtholders,theshareholdersgetnothing.1-211.2CorporateSecuritiesa1-22DebtandEquityasContingentClaims$F$FPayoffto

debtholdersValueofthefirm(X)Debtholdersarepromised$F.Ifthevalueofthefirmislessthan$F,theygetthewhateverthefirmifworth.Ifthevalueofthefirmismorethan$F,debtholdersgetamaximumof$F.$FPayoffto

shareholdersValueofthefirm(X)Ifthevalueofthefirmislessthan$F,shareholdersgetnothing.Ifthevalueofthefirmismorethan$F,shareholdersgeteverythingabove$F.Algebraically,thebondholder’sclaimis:Min[$F,$X]Algebraically,theshareholder’sclaimis:Max[0,$X–$F]1-22DebtandEquityasConting1-23$F$FCombinedPayoffstodebtholders

andshareholdersValueofthefirm(X)Debtholdersarepromised$F.PayofftodebtholdersPayofftoshareholdersIfthevalueofthefirmislessthan$F,theshareholder’sclaimis:Max[0,$X–$F]=$0andthedebtholder’sclaimisMin[$F,$X]=$X.Thesumoftheseis=$XIfthevalueofthefirmismorethan$F,theshareholder’sclaimis:Max[0,$X–$F]=$X–$Fandthedebtholder’sclaimis:Min[$F,$X]=$F.Thesumoftheseis=$XCombinedPayoffstoDebtandEquity1-23$F$FCombinedPayoffstode1-24Example1Supposedebtholdersarepromised$100,thefirm’svalueis$75,howmuchwillthedebtholdersandstockholdersget?1-24Example1Supposedebtholde1-25Inthiscase,thedebtholderswillget$75=min(75,100),thestockholderswillgetnothing!Thestockholders’claim=max(0,75-100)=01-25Inthiscase,thedebthold1-26Example2Ifthefirm’svalueis$200,thefirmhaspromisedtopaythedebtholder$100,howmuchwillthedebtholderandstockholdersget?1-26Example2Ifthefirm’sval1-27Thedebtholderwillget$100=min(100,200),thestockholderswillget$100=max[0,(200-100)].1-27Thedebtholderwillget$11-28MultiplechoiceTheSimpleCorporationhasoutstandingobligationtotheComplexCorporationof$250.Itisyear-endandthetotalcashflowofSimplefromallsourcesis$325.Thecontingentpayofftothedebtholdersandtheshareholdersis A) $250;$325 B) $75;$250 C) $250;$75 D) $325;$250E) Noneoftheabove.1-28MultiplechoiceTheSimple1-29Answer:C1-29Answer:C1-301.3TheCorporateFirmThecorporateformofbusinessisthestandardmethodforsolvingtheproblemsencounteredinraisinglargeamountsofcash.However,businessescantakeotherforms.1-301.3TheCorporateFirmThe1-31FormsofBusinessOrganizationTheSoleProprietorship(p10)Asoleproprietorshipisabusinessownedbyoneperson.ThePartnership:anytwoormorepersonscangettogetherandformapartnership.GeneralPartnership:allpartnersagreetoprovidesomefractionofworkandcashandtosharetheprofitsandlossesLimitedPartnership:permittheliabilityofsomeofthepartnerstobelimitedtotheamountofcasheachhascontributedtothepartnership1-31FormsofBusinessOrganiza1-32TheCorporationAcorpotationisalegalentity,itcanhaveanameandenjoymanyofthelegalpowerofnaturalpersons(enterintocontractsandmaysueandbesued)AdvantagesLiquidityandMarketabilityofOwnership:ownershipcanbereadilytransfererredLiability:limitedliabilityContinuityofExistence:unlimitedlifeDisadvantagesTaxConsiderations:doubletaxation1-32TheCorporation1-33AComparisonofPartnership

andCorporations(p13)

CorporationPartnershipLiquiditySharescaneasilybeexchanged.Subjecttosubstantialrestrictions.VotingRightsUsuallyeachsharegetsonevoteGeneralPartnerisincharge;limitedpartnersmayhavesomevotingrights.TaxationDoublePartnerspaytaxesondistributions.ReinvestmentanddividendpayoutBroadlatitudeAllnetcashflowisdistributedtopartners.LiabilityLimitedliabilityGeneralpartnersmayhaveunlimitedliability.Limitedpartnersenjoylimitedliability.ContinuityPerpetuallifeLimitedlife1-33AComparisonofPartnershi1-341.4GoalsoftheCorporateFirmThetraditionalansweristhatthemanagersofthecorporationareobligedtomakeeffortstomaximizeshareholderwealth.1-341.4GoalsoftheCorporate1-35TheSet-of-ContractsPerspectiveTheorganisationInterestgroupInvestorThepublicSuppliersGovernmentMediaConsumersIndustrybodiesEmployees

1-35TheSet-of-ContractsPersp1-36TheSet-of-ContractsPerspectiveThefirmcanbeviewedasasetofcontracts.Oneofthesecontractsisbetweenshareholdersandmanagers.Themanagerswillusuallyactintheshareholders’interests.Theshareholderscandevisecontractsthataligntheincentivesofthemanagerswiththegoalsoftheshareholders.Theshareholderscanmonitorthemanagersbehavior.Thiscontractingandmonitoringiscostly.1-36TheSet-of-ContractsPersp1-37AgencycostsThecostofresolvingtheconflictsofinterestbetweenmanagersandshareholdersarecalledagencycosts.Thesecostsaredefinedasthesumof(1)themonitoringcostsoftheshareholdersand(2)thecostsofimplementingcontroldevices.1-37AgencycostsThecostofre1-38ManagerialGoalsManagerialgoalsmaybedifferentfromshareholdergoalsWillimsonproposesthenotionofExpensivepreference:managersobtainvaluefromcertainkindsofexpenses.AccordingtoDonaldson:SurvivalIndependenceThebasicfinancialobjectiveofmanagersisthemaximizationofcorporatewealth.1-38ManagerialGoalsManagerial1-39SeparationofOwnershipandControlBoardofDirectorsManagementAssetsDebtEquityShareholdersDebtholders1-39SeparationofOwnershipan1-40DoShareholdersControl

ManagerialBehavior?(p16)Shareholdersvotefortheboardofdirectors,whointurnhirethemanagementteam.Contractscanbecarefullyconstructedtobeincentivecompatible.Thereisamarketformanagerialtalent—thismayprovidemarketdisciplinetothemanagers—theycanbereplaced.Ifthemanagersfailtomaximizeshareprice,theymaybereplacedinahostiletakeover.1-40DoShareholdersControl

Ma1-411.5FinancialMarketsThefinancialmarketsarecomposedofthemoneymarketsandthecapitalmarkets.Moneymarketsarethemarketsfordebtsecuritiesthatwillpayoffintheshortterm(usuallylessthanoneyear).Capitalmarketsarethemarketsforlong-termdebt(withamaturityatoveroneyear)andforequityshares.1-411.5FinancialMarketsThef1-421.5FinancialMarketsThefinancialmarketscanbeclassifiedfurtherastheprimarymarketandthesecondarymarkets.PrimaryMarketWhenacorporationissuessecurities,cashflowsfrominvestorstothefirm.UsuallyanunderwriterisinvolvedSecondaryMarkets

Involvethesaleof“used”securitiesfromoneinvestortoanother.Therearetwokindsofsecondarymarkets:theauctionmarketsandthedealermarkets.TheequitysecuritiesofmostlargeU.SfirmstradeinorganizedauctionmarketssuchastheNewYorkStockExchange(NYSE),theAmericanStockExchangeMostdebtsecuritiesaretradedindealermarkets.Securitiesmaybeexchangetradedortradeover-the-counterinadealermarket.1-421.5FinancialMarketsThef1-43FinancialMarketsFirmsInvestorsSecondaryMarketmoneysecuritiesSueBobStocksandBondsMoneyPrimaryMarket1-43FinancialMarketsSecondary1-44SecondarymarketTherearetwokindsofsecondarymarkets:theauctionmarketsanddealermarket.TheequitysecuritiesofmostlargeU.S.firmsaretradeinorganizedauctionmarkets,suchastheNewYorkStockExchange.Mostdebtsecuritiesaretradedindealermarket.Somestocksaretradedinthedealermarkets.whentheyare,itisreferredtoastheover-the-countermarket(OTC)1-44SecondarymarketThereare1-45NASDAQInFebruary1971,theNationalAssociationofSecuritiesDealersmadeavailabletodealersandbrokersintheOTCmarketanautomatedquotationsystemcalledtheNationalAssociationofSecuritiesDealersAutomatedQuotationsystem.1-45NASDAQInFebruary1971,the1-46ExchangeTradingofListedStocksAuctionmarketsaredifferentfromdealermarketsintwoways:Tradinginagivenauctionexchangetakesplaceatasinglesiteontheflooroftheexchange.Transactionpricesofsharesarecommunicatedalmostimmediatelytothepublic.1-46ExchangeTradingofListed1-471.6OutlineoftheTextOverviewValueandCapitalBudgetingRiskCapitalStructureandDividendPolicyLong-TermFinancingOptions,FuturesandCorporateFinanceFinancialPlanningandShort-TermFinanceSpecialTopics1-471.6OutlineoftheTextOve1-48PartIIdescribeshowinvestmentopportunitiesarevaluedinfinancialmarkets.Thispartcontainsbasictheory.Becausefinanceisasubjectthatbuildsunderstandingfromthegroundup,thematerialisveryimportant.ThemostimportantconceptinPartIIisnetpresentvalue.Wedevelopthenetpresentvalueruleintoatoolforvaluinginvestmentalternatives.Wediscussgeneralformulasandapplythemtoavarietyofdifferentfinancialinstruments.1-48PartIIdescribeshowinve1-49PartIIIintroducesbasicmeasuresofrisk.Thecapital-assetpricingmodel(CAPM)andthearbitragepricingtheory(APT)areusedtodevisemethodsforincorporatingriskinvaluation.Aspartofthisdiscussion,wedescribethefamousbetacoefficient.Finally,weusetheabovepricingmodelstohandlecapitalbudgetingunderrisk.1-49PartIIIintroducesbasic1-50PartIVexaminestwointerrelatedtopics:capitalstructureanddividendpolicy.Capitalstructureistheextenttowhichthefirmreliesondebt.Itcannotbeseparatedfromtheamountofcashdividendsthefirmdecidestopayouttoitsequityshareholders.1-50PartIVexaminestwointer1-51PartVconcernslong-termfinancing.Wedescribethesecuritiesthatcorporationsissuetoraisecash,aswellasthemechanicsofofferingsecuritiesforapublicsale.Herewediscusscallprovisions,warrants,convertibles,andleasing.PartVIdiscussesspecialcontractualarrangementscalledOptions.1-51PartVconcernslong-term1-52PartVIIisdevotedtofinancialplanningandshort-termfinance.Thefirstchapterdescribesfinancialplanning.Nextwefocusonmanagingthefirm'scurrentassetsandcurrentliabilities.Wedescribeaspectsofthefirm'sshort-termfinancialmanagement.Separatechaptersoncashmanagementandoncreditmanagementareincluded.PartVIIIcoverstwoimportantspecialtopics:mergersandinternationalcorporatefinance1-52PartVIIisdevotedtofin1-53MultiplechoiceIfafirmhasdebtoutstandingthecontingentclaimofashareholderis A) equaltothepaymenttothedebtholders. B) equaltothefirmcashflowsminusthefixeddebtpaymentiftheresidualcashflowsarepositive. C) equaltothefirmcashflowsminusthefixeddebtpaymentwhetherpositiveornegative. D) equaltothedebtpaymentplustheresidualcashflowofthefirm. E) Noneoftheabove.1-53MultiplechoiceIfafirmh1-54Answer:B1-54Answer:B1-55Inthelargecorporation,theseparationofmanagementandownershipprovidesthefollowingadvantage(s) A) itmusthavealimitedlife. B) easeofshareownershiptransfer. C) unlimitedshareholderliability. D) BothAandB. E) BothBandC.1-55Inthelargecorporation,1-56Answer:B1-56Answer:B1-57Theprimarymarketisdefinedasthe A) marketforinsuredsecurities. B) marketfornewissues. C) marketforsecuritiesofthelargestfirms. D) over-the-countermarket. E.)Noneoftheabove.1-57Theprimarymarketisdefi1-58Answer:B1-58Answer:B1-59TheNYSEandNASDAQareboth A) primarymarkets. B) dealermarkets. C) secondarymarkets. D) Alloftheabove. E) Noneoftheabove.1-59TheNYSEandNASDAQarebo1-60Answer:C1-60Answer:C1-61Fromafinanceperspective,whatistheprimarygoalofthecorporation? A) Maximizethepayandcompensationofemployeesandmanagersofthefirm. B) Maximizethevalueofthestockholdersbecausetheyaretheownersofthecorporation. C) Maximizethewealthofallstakeholdersifthefirmwantstocontinuetoexist. D) Maximizethesocietalvaluetominimizegovernmentalinterference. E) Noneoftheabove.1-61Fromafinanceperspective1-62Answer:B1-62Answer:B1-63Shareholdersattempttocontrolmanagerialbehaviorby A) electingtheboardofdirectorswhoselectmanagement. B) thethreatofatakeoverbyanotherfirm. C) settingcompensationcontractsandtyingcompensationtocorporatesuccess. D) BothAandB. E) Alloftheabove.1-63Shareholdersattempttoco1-64Answer:E1-64Answer:E1-65Financialmarketsarecomposedof A) capitalmarketsandequitymarkets. B) capitalmarketsanddebtmarkets. C) capitalmarketsandmoneymarkets. D) equitymarketsandmoneymarkets.1-65Financialmarketsarecomp1-66Answer:C1-66Answer:C本资料来源本资料来源公司理财培训教程(英文版)课件1-69CHAPTER1IntroductiontoCorporateFinance./sites/0072829206/student_view0/1-2CHAPTER1IntroductiontoCor1-70ChapterOutline1.1WhatisCorporateFinance?1.2CorporateSecuritiesasContingentClaimsonTotalFirmValue1.3TheCorporateFirm1.4GoalsoftheCorporateFirm1.5FinancialMarkets1.6OutlineoftheText1-3ChapterOutline1.1Whatis1-71WhatisCorporateFinance?

CorporateFinanceaddressesthefollowingthreequestions:Whatlong-terminvestmentsshouldthefirmengagein?Howcanthefirmraisethemoneyfortherequiredinvestments?Howmuchshort-termcashflowdoesacompanyneedtopayitsbills?1-4WhatisCorporateFinance? 1-72TheBalance-SheetModel

oftheFirmCurrentAssetsFixedAssets1Tangible2IntangibleTotalValueofAssets:Shareholders’EquityCurrentLiabilities

Long-TermDebtTotalFirmValuetoInvestors:1-5TheBalance-SheetModel

of1-73TheBalance-SheetModel

oftheFirmCurrentAssetsFixedAssets1Tangible2IntangibleShareholders’EquityCurrentLiabilities

Long-TermDebtWhatlong-terminvestmentsshouldthefirmengagein?TheCapitalBudgetingDecision1-6TheBalance-SheetModel

of1-74TheBalance-SheetModel

oftheFirmHowcanthefirmraisethemoneyfortherequiredinvestments?TheCapitalStructureDecisionCurrentAssetsFixedAssets1Tangible2IntangibleShareholders’EquityCurrentLiabilities

Long-TermDebt1-7TheBalance-SheetModel

of1-75TheBalance-SheetModel

oftheFirmHowmuchshort-termcashflowdoesacompanyneedtopayitsbills?TheNetWorkingCapitalInvestmentDecisionNetWorkingCapitalShareholders’EquityCurrentLiabilitiesCurrentAssetsFixedAssets1Tangible2Intangible

Long-TermDebt1-8TheBalance-SheetModel

of1-76CapitalStructureThevalueofthefirmcanbethoughtofasapie,itwilldependonhowwellthefirmhasmadeitsinvestmentdecisionThegoalofthemanageristoincreasethesizeofthepie.TheCapitalStructuredecisioncanbeviewedashowbesttosliceupathepie.Ifhowyouslicethepieaffectsthesizeofthepie,thenthecapitalstructuredecisionmatters.50%Debt50%Equity25%Debt75%Equity70%Debt30%Equity1-9CapitalStructureThevalue1-77HypotheticalOrganizationChartChairmanoftheBoardand

ChiefExecutiveOfficer(CEO)BoardofDirectorsPresidentandChief

OperatingOfficer(COO)VicePresidentand

ChiefFinancialOfficer(CFO)TreasurerControllerCashManagerCapitalExpendituresCreditManagerFinancialPlanningTaxManagerFinancialAccountingCostAccountingDataProcessing1-10HypotheticalOrganization1-78TheFinancialManagerTocreatevalue,thefinancialmanagershould:Trytomakesmartinvestmentdecisions.Trytomakesmartfinancingdecisions.1-11TheFinancialManagerTocr1-79Cashflow

fromfirm(C)TheFirmandtheFinancialMarketsTaxes(D)FirmGovernmentFirmissuessecurities(A)Retained

cashflows(F)Invests

inassets

(B)Dividendsand

debtpayments(E)Currentassets

FixedassetsFinancial

marketsShort-termdebtLong-termdebtEquitysharesUltimately,thefirmmustbeacashgeneratingactivity.Thecashflowsfromthefirmmustexceedthecashflowsfromthefinancialmarkets.1-12Cashflow

fromfirm(C)The1-80Multiplechoice1.Whichofthefollowingisnotconsideredoneofthebasicquestionsofcorporatefinance? A) Whatlong-livedassetsshouldthefirminvest? B) Howmuchinventoryshouldthefirmhold? C) Howcanthefirmraisecashforrequiredcapitalexpenditures? D) Howshouldtheshort-termoperatingcashflowsbemanaged? E) Alloftheabove.1-13Multiplechoice1.Whichof1-81Answer:B1-14Answer:B1-822.Thebalancesheetismadeupofwhatfivekeycomponents? A) Fixedassets,currentliabilities,longtermdebt,tangiblecurrentassetsandshareholdersequity B) Intangiblefixedassets,currentliabilities,long-termdebt,netincomeandcurrentassets C) Fixedassets,long-termdebt,currentassets,currentliabilitiesandshareholdersequity D) Currentassets,fixedassets,longtermdebt,shareholdersequityandretainedearnings E) Noneoftheabove.1-152.Thebalancesheetismad1-83Answer:C1-16Answer:C1-843.Capitalstructureisdefinedasthemajorfinancingofthefirm.Thecapitalstructureisdivided A) betweendebtorsandcreditors. B) creditorsandshareholders. C) assetsandliabilities. D) Alloftheabove. E) Noneoftheabove.1-173.Capitalstructureisde1-85Answer:B1-18Answer:B1-864.InthemanagerialstructureofthecorporationthetwoofficersandtheirresponsibilitiesthatreportdirectlytotheChiefFinancialOfficer(CFO)are A) thecreditmanagerwhohandlesaccountsreceivableandthetaxmanagerwhominimizestaxpayments. B) thepersonnelmanagerwhomanagessalariesandcompensation,andtheproductionoperationsmanagerwhomanagesfacilityoperations. C) thetreasurerwhoisresponsiblehandlingcashflowandmakingfinancialdecisionsandthetaxmanagerwhominimizestaxpayments. D) thecontrollerwhomanagestheaccountingfunctionandthetreasurerwhoisresponsiblehandlingcashflowandmakingfinancialdecisions.

E) Noneoftheabove.1-194.Inthemanagerialstruc1-87Answer:D1-20Answer:D1-881.2CorporateSecuritiesasContingentClaimsonTotalFirmValueThebasicfeatureofadebtisthatitisapromisebytheborrowingfirmtorepayafixeddollaramountofbyacertaindate.Theshareholder’sclaimonfirmvalueistheresidualamountthatremainsafterthedebtholdersarepaid.Ifthevalueofthefirmislessthantheamountpromisedtothedebtholders,theshareholdersgetnothing.1-211.2CorporateSecuritiesa1-89DebtandEquityasContingentClaims$F$FPayoffto

debtholdersValueofthefirm(X)Debtholdersarepromised$F.Ifthevalueofthefirmislessthan$F,theygetthewhateverthefirmifworth.Ifthevalueofthefirmismorethan$F,debtholdersgetamaximumof$F.$FPayoffto

shareholdersValueofthefirm(X)Ifthevalueofthefirmislessthan$F,shareholdersgetnothing.Ifthevalueofthefirmismorethan$F,shareholdersgeteverythingabove$F.Algebraically,thebondholder’sclaimis:Min[$F,$X]Algebraically,theshareholder’sclaimis:Max[0,$X–$F]1-22DebtandEquityasConting1-90$F$FCombinedPayoffstodebtholders

andshareholdersValueofthefirm(X)Debtholdersarepromised$F.PayofftodebtholdersPayofftoshareholdersIfthevalueofthefirmislessthan$F,theshareholder’sclaimis:Max[0,$X–$F]=$0andthedebtholder’sclaimisMin[$F,$X]=$X.Thesumoftheseis=$XIfthevalueofthefirmismorethan$F,theshareholder’sclaimis:Max[0,$X–$F]=$X–$Fandthedebtholder’sclaimis:Min[$F,$X]=$F.Thesumoftheseis=$XCombinedPayoffstoDebtandEquity1-23$F$FCombinedPayoffstode1-91Example1Supposedebtholdersarepromised$100,thefirm’svalueis$75,howmuchwillthedebtholdersandstockholdersget?1-24Example1Supposedebtholde1-92Inthiscase,thedebtholderswillget$75=min(75,100),thestockholderswillgetnothing!Thestockholders’claim=max(0,75-100)=01-25Inthiscase,thedebthold1-93Example2Ifthefirm’svalueis$200,thefirmhaspromisedtopaythedebtholder$100,howmuchwillthedebtholderandstockholdersget?1-26Example2Ifthefirm’sval1-94Thedebtholderwillget$100=min(100,200),thestockholderswillget$100=max[0,(200-100)].1-27Thedebtholderwillget$11-95MultiplechoiceTheSimpleCorporationhasoutstandingobligationtotheComplexCorporationof$250.Itisyear-endandthetotalcashflowofSimplefromallsourcesis$325.Thecontingentpayofftothedebtholdersandtheshareholdersis A) $250;$325 B) $75;$250 C) $250;$75 D) $325;$250E) Noneoftheabove.1-28MultiplechoiceTheSimple1-96Answer:C1-