Introduction to Finance

f
present value, determination, 277–279
prices, interest rates (relationship), 282
f
private market, 256
purchasers, identification, 256
quotation, example, 261
f
quotes, reading, 269–270
security, 258–259
impact, 258–259
variations, 265
selling at discount, 279
time to maturity, 263–264
valuation, 277–279
risk, impact, 281–282
value, annual coupon payments (usage), 277
yield to maturity (YTM), 283
calculation, 279–281
Book value (BV), 555
Boom economy, control/prediction (absence), 
350
Borrower firms, short-term financing 
(obtaining), 475
Bradlees, Chapter 11 bankruptcy protection, 
511
Branch banking
degree, 62
limited branch banking defined, 61
statewide branch banking, defined, 61
Break-even analysis, defined, 445
Break-even price, defined, 339
Bretton Woods
fixed exchange rate system (1945–1972), 
132–133
meeting (1944), 39–40
Bretton Woods System, defined, 132
Broker, defined, 312
Brokerage firms, defined, 48
Brokers
floor, defined, 315
independent, defined, 315
Budget, 171
defined, 442
explanation, 463
surplus, defined, 107
Budget deficit, defined, 107, 171 
Budget surplus, 171
Burns, Arthur, 84, 85
Bush, George W., 85
Businesses. 
See also
Small businesses
angels, identification, 313
bank line of credit, increase, 506
cost of capital, 576–578
earnings retention, 176
failure, reasons, 439
Banks
assets, 63–64, 65
balance sheet, 62–67
charters, 61
clearinghouses, usage, 53
definition, 46
fees, 56
functions, 53–54
lines of credit, 499–501
increase, business request, 506
liquidity
defined, 67
profitability objective, trade-off, 68
f
management, 67–69
mergers, 500
t
primary deposit, receiving (example), 
115–116
prime rate, changes (1980–2015), 90
f
profitability, increase, 67
solvency
defined, 67
profitability objective, trade-off, 68
f
structure, 61–62
teller, career, 16
term, usage, 115
Barbells, investing, 260
Barter, defined, 27
Base case, defined, 541
Basel I Accord, 70
Basel II Accord, 70
Basel III Accord, 70, 71
Bearer bonds, defined, 256
Bear Stearns
acquisition, 47, 108, 112
failure, 299
Benchmark index, mutual funds 
(underperformance), 357
t
Benefit/cost ratio (profitability index), 
defined, 536
Bernanke, Ben, 84, 85–86
Best-effort agreement, defined, 301
Best-effort offering, 310
Beta
coefficient, calculation process, 375
t
defined, 366
estimation, 373–375
slope, calculation, 374
Bid, defined, 317
Bid price, setting, 561–563
Bill of exchange (draft)
defined, 145
example, 145
f
Bill of lading. 
See
Order bill of lading
Bimetallic standard, 132
definition, 28
Bitcoin, defined, 40
Blanket inventory lien, defined, 513
Blue-sky laws, defined, 313
Board of Governors, 80, 81
f
classes, 83
defined, 83
of the Federal Reserve System, 81
f
Bondholders, legal status, 256
Bond markets. 
See also
Global bonds
defined, 15
high-yield sector, growth, 259

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INDEX
621
Commercial banking, 51–54
intermediation activities, 52
f
Commercial finance company, 505–506
defined, 505
equity position, 506
Commercial letter of credit
defined, 148
example (
See
Irrevocable commercial letter 
of credit)
Commercial paper, 473, 506
activities, investment banking firm 
dominance, 312
annualized cost, 507
defined, 34, 506
rates, T-bill rates (differences), 475
f
sale, 507
Commission brokers (house brokers), 
defined, 315
Commissions, 324
Common equity, cost, 572–573
Common-size balance sheets, 399
t
Common-sized financial statements, 
defined, 399
Common-size statements, computation, 400
Common stockholders, standing, 267
Common stocks, 182, 266–268
cost (