I-4 INDEX

Ratio Analysis

1-33, 1-47

Real Interest Rate

5-4, 5-5, 5-27

Residual Value

8-1, 8-2, 8-8--8-10, 8-13--8-15, 8-17, 8-18, 8-29

Return on Common Equity Ratio

1-42, 1-43, 1-47

Return on Total Assets Ratio

1-42, 1-43, 1-47

Risk Premium

2-8--2-10, 2-13, 6-29, 6-35, 6-41--6-46

Risk-free Rate

2-7, 2-8, 2-12, 2-15, 5-4, 6-4, 7-6, 7-8

Secondary Market

2-4, 2-9, 4-4, 9-2, 9-6, 9-43, 10-3

Security Market Line

6-43--6-46

Simple Interest

3-2--3-4, 3-41, 9-5, 9-25

Standard Deviation

6-3, 6-12, 6-16--6-18, 6-22, 6-23, 6-25, 6-26, 6-28, 6-
29, 6-33, 6-35, 6-45

Swap

2-5, 10-1, 10-9--10-16

Systematic Risk

6-3, 6-27, 6-28, 6-30, 6-33, 6-35, 6-37, 6-45

Times Interest Earned Ratio

1-40, 1-41, 1-47

Total Asset Turnover Ratio

1-36--1-39, 1-47

Total Debt to Total Assets Ratio

1-40

Unsystematic Risk

6-3, 6-27--6-30, 6-35, 6-37, 6-45

Valuation

1-1, 3-31, 4-1, 4-7--4-12, 6-1, 6-3, 8-1, 8-8, 8-10, 8-
21, 8-24, 8-26

Variance

6-3, 6-12--6-18, 6-45

Volatility

2-10, 6-3, 6-18, 6-33, 6-37, 6-47, 8-1

Weighted Average Cost of Capital
(WACC)

7-1, 7-8, 7-15, 7-16, 7-18, 7-19, 8-13

Yield Curve

2-10--2-13, 2-15

Yield to Maturity

9-3--9-4, 9-7, 9-11--9-13, 9-19, 9-20,
9-24--9-26, 9-34, 9-36, 9-38, 9-39, 9-43

Zero-coupon Bond

1-4, 3-24, 4-3, 9-2--9-4, 9-6, 9-7, 9-38, 9-43

Document Outline

Introduction
- COURSE OVERVIEW
- COURSE OBJECTIVES
- THE WORKBOOK
Unit 1
- INTRODUCTION
- UNIT OBJECTIVES
- BALANCE SHEET
- PROGRESS CHECK 1.1
- INCOME STATEMENT
- PROGRESS CHECK 1.2
- CASH FLOW STATEMENT
- PROGRESS CHECK 1.3
- FINANCIAL RATIOS
- UNIT SUMMARY
- PROGRESS CHECK 1.4
Unit 2
- INTRODUCTION
- UNIT OBJECTIVES
- OVERVIEW OF FINANCIAL MARKETS
- INTEREST RATES
- UNIT SUMMARY
- PROGRESS CHECK 2
Unit 3
- INTRODUCTION
- UNIT OBJECTIVES
- FUTURE VALUE
- PRACTICE EXERCISE 3.1
- PRACTICE EXERCISE 3.2
- PRESENT VALUE
- PRACTICE EXERCISE 3.3
- ANNUITIES
- UNEVEN PAYMENT STREAMS
- PRACTICE EXERCISE 3.4
- UNIT SUMMARY
- PROGRESS CHECK 3
Unit 4
- INTRODUCTION
- UNIT OBJECTIVES
- BONDS
- COMMON STOCK
- PREFERRED STOCK
- UNIT SUMMARY
- PROGRESS CHECK 4
Unit 5
- INTRODUCTION
- UNIT OBJECTIVES
- NOMINAL AND EFFECTIVE RATES
- PRACTICE EXERCISE 5.1
- NET PRESENT VALUE
- PRACTICE EXERCISE 5.2
- INTERNAL RATE OF RETURN
- ADJUSTING NPV AND IRR FOR INFLATION
- OTHER METHODS FOR MAKING INVESTMENT DECISIONS
- PRACTICE EXERCISE 5.3
- UNIT SUMMARY
- PROGRESS CHECK 5
Unit 6
- INTRODUCTION
- UNIT OBJECTIVES
- CALCULATING EXPECTED CASH FLOWS
- PRACTICE EXERCISE 6.1
- MEASURING RISK
- PRACTICE EXERCISE 6.2
- PORTFOLIO RISK
- PRACTICE EXERCISE 6.3
- PRACTICE EXERCISE 6.4
- SYMBOLS AND DEFINITIONS
- RISK VS. RETURN
- PRACTICE EXERCISE 6.5
- UNIT SUMMARY
Unit 7
- INTRODUCTION
- UNIT OBJECTIVES
- SOURCES OF CAPITAL AND THEIR COSTS
- PRACTICE EXERCISE 7.1
- PRACTICE EXERCISE 7.2
unit 8
- INTRODUCTION
- UNIT OBJECTIVES
- FORECASTING CASH FLOWS
- RESIDUAL VALUE
- PRACTICE EXERCISE 8.1
- DISCOUNTED CASH FLOW METHOD
- PRACTICE EXERCISE 8.2
- OTHER VALUATION METHODOLOGIES
- FACTORS AFFECTING VALUE
- UNIT SUMMARY
- PROGRESS CHECK 8
Unit 9
- INTRODUCTION
- UNIT OBJECTIVES
- INTRODUCTION TO BOND PRICING AND YIELD MATHEMATICS
- PRACTICE EXERCISE 9.1
- PRACTICE EXERCISE 9.2
- BOND PRICE QUOTES
- PRACTICE EXERCISE 9.3
- DURATION
- PRACTICE EXERCISE 9.4
- UNIT SUMMARY
Unit 10
- INTRODUCTION
- UNIT OBJECTIVES
- OPTIONS
- SWAPS
- UNIT SUMMARY
- PROGRESS CHECK 10
Appendix
- Glossary
  - A
  - B
  - C
  - D
  - E
  - F
  - I
  - L
  - M
  - N
  - O
  - P
  - Q
  - R
  - S
  - T
  - U
  - V
  - W
  - Y
  - Z
- Index
  - A
  - B
  - C
  - D
  - E
  - F
  - I
  - L
  - M
  - N
  - O
  - P
  - Q
  - R
  - S
  - T
  - U
  - V
  - W
  - Y
  - Z

Fundamentals of Business

Document Outline