Stock Markets and Corporate Finance

This book examines the nature of the stock market and its implications for corporate management. It provides an introduction to core issues in finance and differs from traditional textbooks in its recognition that "finance is not physics" — in the sense that how markets behave today is not necessarily how they will behave tomorrow. Nevertheless, a certain level of "physics" can be recognized as underpinning the development of stock market valuations and corporate financial decision-making.

In short, the objective of the text is to instill insight in regards to the functioning of markets and corporate behavior, as opposed to algebraic derivations from unrealistic assumptions. Rather than subscribe unthinkingly to an "efficient market hypothesis", at each stage of the development of the text's conceptual framework, we also recognize the reality of market "sentiment" and the fundamental uncertainty that managers face in their decisions.

Based around a teaching programme with worked questions and solutions, Stock Markets and Corporate Finance is the perfect accompaniment for MBA, undergraduate and graduate students looking for a critical textbook on the nature of the financial sector and corporate finance.

Contents:

• Introduction: Stock Markets, Investments and Corporate Financial Decision Making
• A Short History of Stock Markets
• The Time Value of Money and Financial Planning
• Market Debt, Interest Rates and Bond Valuation
• The Valuation of Equity Shares
• Shareholders' Required Rate of Return (The Cost of Equity Capital)
• Accounting Statements and Ratio Analysis
• Financial Leverage
• Valuation of Cash Flows
• Currency Exchange Rates
• Derivatives Instruments: Hedging (Speculating on) Currency Risk
• Investment Decision-Making: Theory and Practice
• Equity Value and Personal Taxes
• Financial Leverage (Revisited)
• Valuation of the Firm's Cash Flows (Revisited)
• Ethical Behavior

Readership: MBA, undergraduate and graduate students looking for a critical textbook on the nature of the financial sector and corporate finance.