Summary: Fundamentals Of Corporate Finance  9780273753469  Jonathan B Berk, et al
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Read the summary and the most important questions on Fundamentals of Corporate Finance  9780273753469  Jonathan B. Berk; Peter M. DeMarzo; Jarrad V. T. Harford

2 Introduction to Financial Statement Analysis

2.4 The Income Statement
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How do you calculate the Leverage Ratio? (also Interest coverage ratio (TIE))
Operating Income devided by Interest Expense 
5 Interest Rates

5.1 Interest Rate Quotes and Adjustments
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When you buy a car with borrowed money, of what is the interest the price?
The price to be able to convert money paid in the future to a car right now 
Why is it important to convert interest rates to the same time unit before comparison?
Because you cannot compare a daily interest rate with a yearly interest rate 
What is a different name for the effective anual rate?
The annual percentage yield 
What is the effective annual rate?
The effective interest paid in a year time unit 
How do you calculate the equivalent interet rate at a different period length? E.g. EAR of r to monthly, or 5 yearly?
(1+r)^n  1
So for monthly n=1/12
For 5 yearly n=5 
What does the annual percentage rate do with compounding?
It doesn't take it into account 
What is the actual effective interest rate of a 6% APR compounded monthly?
6/12 = 0.5 monthly interest
1.005^12  1 = 6.17% after 12 month 
Can the APR be used as a discount rate?
No, you have to take compounding into account 
5.2 Application: Discount Rates and Loans
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What is a amortizing loan?
A loan with equal payments that comprise interest and paying back part of the loan
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Topics related to Summary: Fundamentals Of Corporate Finance

Interest Rates  Application: Discount Rates and Loans

Interest Rates  The Determinants of Interest Rates

Bonds  Bond Terminology

Stock Valuation  The DividendDiscount Model

Investment Decision Rules  The NPV Decision Rule

Investment Decision Rules  Using the NPV Rule

Investment Decision Rules  Alternative Decision Rules  The Payback Rule

Investment Decision Rules  Alternative Decision Rules  Modified Internal Rate of Return

Investment Decision Rules  Evaluating Projects with Different Lives

Investment Decision Rules  Choosing Among Projects When Resources Are Limited

Fundamentals of Capital Budgeting  Forecasting Incremental Earnings

Fundamentals of Capital Budgeting  Determining Incremental Free Cash Flow

Fundamentals of Capital Budgeting  Other Effects on Incremental Free Cash Flows

Fundamentals of Capital Budgeting  Analyzing the Project

Fundamentals of Capital Budgeting  Real Options in Capital Budgeting

Stock Valuation: A Second Look  Caluation Based on Comparable Firms

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium  The Volatility of a Portfolio

Systematic Risk and the Equity Risk Premium  Measuring Systematic Risk

Systematic Risk and the Equity Risk Premium  Putting It All Together: The Capital Asset Pricing Model

The Cost of Capital  The Firm's Costs of Debt and Equity Capital

The Cost of Capital  Using the WACC to Value a Project