【導(dǎo)讀】areasoffinance.newmillennium.businessanization.anization.not.concepts.

　　

【正文】 T A FIRM’S MANAGERS ARE TRYING TO TAKE ADVANTAGE OF THEM, THEY WILL EITHER REFUSE TO DEAL FURTHER WITH THE FIRM OR ELSE WILL CHARGE A HIGHER THAN NORMAL INTEREST RATE TO COMPENSATE FOR THE RISK OF POSSIBLE EXPLOITATION. Learning Objectives: 5 13 THUS, FIRMS THAT DEAL UNFAIRLY WITH CREDITORS EITHER LOSE ACCESS TO THE DEBT MARKETS OR ARE SADDLED WITH HIGH INTEREST RATES AND RESTRICTIVE COVENANTS, ALL OF WHICH ARE DETRIMENTAL TO SHAREHOLDERS. G. IS MAXIMIZING STOCK PRICE THE SAME THING AS MAXIMIZING PROFIT? ANSWER: NO. GENERALLY, THERE IS A HIGH CORRELATION BETWEEN EPS, CASH FLOW, AND STOCK PRICE, AND ALL OF THEM GENERALLY RISE IF A FIRM’S SALES RISE. NEVERTHELESS, STOCK PRICES DEPEND NOT JUST ON TODAY’S EARNINGS AND CASH FLOWSFUTURE CASH FLOWS AND THE RISKINESS OF THE FUTURE EARNINGS STREAM ALSO AFFECT STOCK PRICES. SOME ACTIONS MAY INCREASE EARNINGS AND YET REDUCE STOCK PRICES WHILE OTHER ACTIONS MAY BOOST STOCK PRICE BUT REDUCE EARNINGS. CONSIDER A COMPANY THAT UNDERTAKES LARGE EXPENDITURES TODAY THAT ARE DESIGNED TO IMPROVE FUTURE PERFORMANCE. THESE EXPENDITURES WILL LIKELY REDUCE EARNINGS PER SHARE, YET THE STOCK MARKET MAY RESPOND POSITIVELY IF IT BELIEVES THAT THESE EXPENDITURES WILL SIGNIFICANTLY ENHANCE FUTURE EARNINGS. BY CONTRAST, A COMPANY THAT UNDERTAKES ACTIONS TODAY TO ENHANCE ITS EARNINGS MAY SEE A DROP IN ITS STOCK PRICE, IF THE MARKET BELIEVES THAT THESE ACTIONS COMPROMISE FUTURE EARNINGS AND/OR DRAMATICALLY INCREASE THE FIRM’S RISK. H. WHAT FACTORS AFFECT STOCK PRICES? ANSWER: [SHOW S115 AND S116 HERE.] THE FIRM’S STOCK PRICE IS DEPENDENT ON MANAGERIAL ACTIONS, SUCH AS INVESTMENT DECISIONS, FINANCING DECISIONS, DIVIDEND POLICY DECISIONS, AND EXTERNAL FACTORS, INCLUDING LEGAL CONSTRAINTS, THE GENERAL LEVEL OF ECONOMIC ACTIVITY, TAX LAWS, AND CONDITIONS IN THE STOCK MARKET. MANAGERS CAN ENHANCE THEIR FIRM’S VALUE (AND ITS STOCK PRICE) BY INCREASING THEIR FIRM’S EXPECTED CASH FLOWS, SPEEDING UP CASH FLOWS, AND REDUCING THEIR RISKINESS. I. WHAT FACTORS AFFECT THE LEVEL AND RISKINESS OF CASH FLOWS? ANSWER: [SHOW S117 HERE.] MANAGERIAL ACTIONS, SUCH AS INVESTMENT DECISIONS, FINANCING DECISIONS, AND DIVIDEND POLICY DECISIONS AFFECT THE LEVEL, TIMING, AND THE RISKINESS OF THE FIRM’S CASH FLOWS. Learning Objectives: 5 14 Dryden Press After reading this chapter, students should be able to: ? Define dollar return and rate of return. ? Define risk and calculate the expected rate of return, standard deviation, and coefficient of variation for a probability distribution. ? Specify how risk aversion influences required rates of return. ? Graph diversifiable risk and market risk。 explain which of these is relevant to a welldiversified investor. ? State the basic proposition of the Capital Asset Pricing Model (CAPM) and explain how and why a portfolio’s risk may be reduced. ? Explain the significance of a stock’s beta coefficient, and use the Security Market Line to calculate a stock’s required rate of return. ? List changes in the market or within a firm that would cause the required rate of return on a firm’s stock to change. ? Identify concerns about beta and the CAPM. ? Explain how stock price volatility is more likely to imply risk than earnings volatility. Chapter 2 Risk and Rates of Return LEARNING OBJECTIVES SouthWestern Lecture Suggestions: 5 15 Risk analysis is an important topic, but it is difficult to teach at the introductory level. We just try to give students an intuitive overview of how risk can be defined and measured, and leave a technical treatment to advanced courses. Our primary goals are to be sure students understand (1) that investment risk is the uncertainty about returns on an asset, (2) the concept of portfolio risk, and (3) the effects of risk on required rates of return. What we cover, and the way we cover it, can be seen by scanning Blueprints, Chapter 5. For other suggestions about the lecture, please see the ―Lecture Suggestions‖ in Chapter 2, where we describe how we conduct our classes. DAYS ON CHAPTER: 3 OF 58 DAYS (50minute periods) LECTURE SUGGESTIONS Answers and Solutions: 5 16 51 a. The probability distribution for plete certainty is a vertical line. b. The probability distribution for total uncertainty is the Xaxis from ? to +?. 52 Security A is less risky if held in a diversified portfolio because of its negative correlation with other stocks. In a singleasset portfolio, Security A would be more risky because ?A ?B and CVA CVB. 53 a. No, it is not riskless. The portfolio would be free of default risk and liquidity risk, but inflation could erode the portfolio’s purchasing power. If the actual inflation rate is greater than that expected, interest rates in general will rise to incorporate a larger inflation premium (IP) andas we shall see in Chapter 7the value of the portfolio would decline. b. No, you would be subject to reinvestment rate risk. You might expect to ―roll over‖ the Treasury bills at a constant (or even increasing) rate of interest, but if interest rates fall, your investment ine will decrease. c. A . governmentbacked bond that provided interest with constant purchasing power (that is, an indexed bond) would be close to riskless. The . Treasury currently issues indexed bonds. 54 a. The expected return on a life insurance policy is calculated just as for a mon stock. Each oute is multiplied by its probability of occurrence, and then these products are summed. For example, suppose a 1year term policy pays $10,000 at death, and the probability of the policyholder’s death in that year is 2 percent. Then, there is a 98 percent probability of zero return and a 2 percent proba