Introduction to Finance

t
Initial public offering (IPO), 229
average first-day returns (underpricing), 
311
t
cold IPO markets, 310
defined, 299

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628
INDEX
Long-run inflationary bias, continuation, 211
Long-term corporate debt securities, 
categories, 256
Long-term debt instruments (bonds), 181, 197
Long-term debt to total assets ratio, 579
f
Long-term financial planning, 442–445
Long-term financing
patterns, 497
f
short-term financing, mix decisions, 496
sources, usage, 491
f
Long-term funds, 196
obtaining, 254
Long-term government bonds, return/risk 
measures, 354
Long-term interest rates, 193
changes, 196
Losses (magnification), margin (impact), 319
LP. 
See
Liquidity premium
M
Maastricht Treaty (1991) (Treaty on European 
Union), 106, 134
Macroeconomic events, asset returns 
(sensitivity), 364
MACRS. 
See
Modified accelerated cost 
recovery system
Madoff, Bernie (unethical behavior), 10
Magnetic ink character recognition (MICR), 
96
Maintenance margin, defined, 319
Major currencies index, U.S. dollar value 
(relationship), 143
f
Major money market securities, 
characteristics, 34
f
Maloney Act of 1938, 321
Managers
honesty, 546–547
objectives, differences (finance principle), 
8, 10
Mandatory spending, defined, 171
Margin, defined, 318
Marginal tax rates, 417, 418, 419
Margin call, defined, 319
Margin trading, risk, 319
Marketable debt securities, maturity 
distribution, 202–203
Marketable government securities, defined, 
198
Marketable interest-bearing federal 
obligations, average length/maturity 
distribution, 202
t
Marketable issues, 198
Marketable obligations, 198–199
Marketable securities
management, 470–476
qualification, 469–470
Market-based weights, 574–575
Market interest rate, defined, 197
Market order, defined, 317
Market risk (systematic risk), 363–364
defined, 364
Markets
characteristics, 322–324
discussion questions, 341
efficiency, 357
interest rates, determinants, 197
L
Labor specialization methods, efficiency, 5
Ladders, investing, 260
Large-scale arbitrage activities, impact, 141
Law, John, 207
Lehman Brothers
bankruptcy, 47, 475
failure, 299
Lenders, unethical behavior, 242–243
Level production
impact, 467
f
seasonal production, differences, 466–468
Leverage, effects, 587
t
Liability(ies), 66
balance sheet, 395–396
defined, 393
examination, 397
insurance, 47, 50
management, 69
management, impact, 69
Life cycle patterns, 170
Life insurance loans, 514
Limited branch banking, defined, 61
Limited liability company (LLC), defined, 
388
Limited partners, defined, 387
Limited partnership, defined, 387
Limit order, defined, 317
Line of credit, defined, 499
Liquidity. 
See also
Banks
attitudes, 195–196
defined, 27
management, 67–68
preference, 196
preference theory, defined, 206
ratios, 425, 427
analysis, 427–428
risk, defined, 67
Liquidity preference theory, defined, 206
Liquidity premium (LP), defined, 197
Liquidity ratios, defined, 427
Loanable funds
demand, 192
interest rates, effect, 195
interest rates, impact, 196
sources, 194–195
supply, 192
factors, 195–196
theory, 194–195
defined, 194
Loan amortization schedule
defined, 240
example, 240
t
Loan analyst, career, 16
Loans, 64–65
request, calculation, 501
secured loan, defined, 64
securing, stocks/bonds (usage), 514
types, 514
unsecured loan, defined, 64
Local currency, savings/personal power, 33
Local retail credit bureaus, establishment, 
480
Lockbox system, defined, 477
London Stock Exchange, 326, 327
Longer-term shareholders, reason, 274
Investment (