WE WERE MOTIVATED TO WRITE THIS TEXTBOOK BY A CENTRA Linsight:
The core concepts in finance are simple and intuitive. What makes the subject challenging is that it is often difficult for a novice to distinguish between these core ideas and other intuitively appealing approaches that, if used in financial decision making, will lead to incorrect decisions. De-emphasizing the core concepts that underlie finance strips students of the essential intellectual tools they need to differentiate between good and bad decision making.
We present corporate finance as an application of a set of simple, powerful ideas. At the
heart is the principal of the absence of arbitrage opportunities, or Law of One Price—in life, you don’t get something for nothing. This simple concept is a powerful and important tool in financial decision making. By relying on it, and the other core principles in this book, financial decision makers can avoid the bad decisions brought to light by the recent financial crisis. We use the Law of One Price as a compass; it keeps financial decision makers on the right track and is the backbone of the entire book.
PART 1 Introduction
PART 2 Time, Money, and Interest Rates
PART 3 Valuing Projects and Firms
PART 4 Risk and Return
PART 5 Capital Structure
PART 6 Advanced Valuation
PART 7 Options
PART 8 Long-term Financing
PART 9 Short-term Financing
PART 10 Special Topics