Includes bibliographical references and appendices.

Structure of the Book
Our target audience is a student taking his or her first, and perhaps only,finance course.Some of these students will decide to major in finance and go on to take courses in invest-ments,money and capital markets,and advanced corporate finance. Others will choosemarketing,management, or some other nonfinance business major. Still others will majorin areas other than business and take finance plus a few other business courses to gaininformation that will help them in law, real estate, or other fields.
Our challenge has been to provide a book that serves all of these audiences well.We focus on the core principles of finance,including the basic topics of time value ofmoney,risk analysis, and valuation. In each case, we address these topics from twopoints of view: (1) that of an investor who is seeking to make intelligent investmentchoices and (2) that of a business manager trying to maximize the value of his or herfirm's stock. Both investors and managers need to understand the same set of principles,so the core topics are important to students regardless of what they choose to do afterthey finish the course.
In planning the book's structure, we first listed the core topics in finance that areimportant to virtually everyone.Included were an overview of financial markets, methodsused to estimate the cash flows that determine asset values, the time value of money,thedeterminants of interest rates,the basics of risk analysis, and the basics of bond and stockvaluation procedures.We cover these core topics in the first nine chapters.Next,becausemost students in the course will probably work for a business firm, we want to show themhow thecore ideas are implemented in practice.Therefore,we go on to discuss cost ofcapital,capital budgeting, capital structure,dividend policy, working capital management,financial forecasting, international operations, risk management, hybrids, and mergers andacquisitions.
Non-finance majors sometimes wonder why they need to learn finance.As we havestructured the book, it quickly becomes obvious to everyone why they need to understandtime value,risk,markets,and valuation. Virtually all students enrolled in the basic courseexpect at some point to have money to invest,and they quickly realize that the knowl-edge gained from Chapters 1 through 9 will help them make better investment decisions.Moreover,students who plan to go into the business world soon realize that their ownsuccess requires that their firms be successful,and the topics covered in Chapters 11through 21 will be helpful here.For example, good capital budgeting decisions require

Structure of the Book
Our target audience is a student taking his or her first, and perhaps only,finance course.Some of these students will decide to major in finance and go on to take courses in invest-ments,money and capital markets,and advanced corporate finance. Others will choosemarketing,management, or some other nonfinance business major. Still others will majorin areas other than business and take finance plus a few other business courses to gaininformation that will help them in law, real estate, or other fields.
Our challenge has been to provide a book that serves all of these audiences well.We focus on the core principles of finance,including the basic topics of time value ofmoney,risk analysis, and valuation. In each case, we address these topics from twopoints of view: (1) that of an investor who is seeking to make intelligent investmentchoices and (2) that of a business manager trying to maximize the value of his or herfirm's stock. Both investors and managers need to understand the same set of principles,so the core topics are important to students regardless of what they choose to do afterthey finish the course.
In planning the book's structure, we first listed the core topics in finance that areimportant to virtually everyone.Included were an overview of financial markets, methodsused to estimate the cash flows that determine asset values, the time value of money,thedeterminants of interest rates,the basics of risk analysis, and the basics of bond and stockvaluation procedures.We cover these core topics in the first nine chapters.Next,becausemost students in the course will probably work for a business firm, we want to show themhow thecore ideas are implemented in practice.Therefore,we go on to discuss cost ofcapital,capital budgeting, capital structure,dividend policy, working capital management,financial forecasting, international operations, risk management, hybrids, and mergers andacquisitions.
Non-finance majors sometimes wonder why they need to learn finance.As we havestructured the book, it quickly becomes obvious to everyone why they need to understandtime value,risk,markets,and valuation. Virtually all students enrolled in the basic courseexpect at some point to have money to invest,and they quickly realize that the knowl-edge gained from Chapters 1 through 9 will help them make better investment decisions.Moreover,students who plan to go into the business world soon realize that their ownsuccess requires that their firms be successful,and the topics covered in Chapters 11through 21 will be helpful here.For example, good capital budgeting decisions require