Corporate Finance (Book Notes)

Ch. 1 Introduction  Doc Pg 37

1.1 THE GOAL OF FINANCE: RELATIVE VALUATION

Valuation

The Law of One Price

1.2 INVESTMENTS, PROJECTS, AND FIRMS - pg. 39

Project - pg. 39

  cash flows

Firm

1.3 Firms versus Individuals

Ch. 2 The Time Value of Money and Net Present Value

2.1 OUR BASIC SCENARIO: PERFECT MARKETS, CERTAINTY, CONSTANT INTEREST RATES

The perfect market - pg. 49

2.2 LOANS AND BONDS - pg. 50

Loan 

    maturity

Bond

Interest

Fixed Income

Interest Rate

2.3 RETURNS, NET RETURNS, AND RATES OF RETURN

Return - pg. 51

    Subscript

Net return - pg. 51

Rate of return  - pg. 52

    dividends, coupons, capital gain, dividend yield, current yield, rental yield, coupon yield

Basis point - pg. 53

2.4 The Time Value of Money, Future Value, and Compounding

Time value of money

Future value pg. 54

Spot Rate pg. 57

    Connection between rate of return and FV formula - pg. 57

How Banks Quote Interest Rates - pg. 59

Annual percentage Yield (APY) 

    annual equivalent rate or effective annual rate

Interest rate

Annual Percentage Rate (APR) - pg. 60

Certificate of deposit (CD) 

2.5 PRESENT VALUES, DISCOUNTING, AND CAPITAL BUDGETING

Present Value - pg. 61

Present value formula

Discounting

Cost of capital - pg. 62

Opportunity cost

Discount factor - pg. 63

    discount rate