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Finance
Zvi
Bodie , Boston University
Robert C. Merton , Harvard University
For
undergraduate Corporate Finance, MBA Finance course, and Financial Economics.
This
significant new finance text has a broader scope and greater emphasis on general
principles than most other introductory finance texts, which typically focus exclusively
on corporate finance. This text incorporates Corporate Finance, investments, and
institutions. Acclaimed authors Bodie and Merton offer an approach balanced among the
three "pillars" of finance optimization over time, asset valuation, and risk
management. The book encompasses all subfields of finance within a single unifying
conceptual framework, and offers the "big picture" of resource allocation over time
under conditions of uncertainty.
Incorporates
all areas of finance Including investments, institutions, and corporate finance.
Departs from other texts, which focus almost exclusively on corporate finance.
Emphasizes
material that students can relate to.
Unifying
Theme 3 pillars of finance The three pillars of finance (optimization over
time, asset valuation, and risk management) represent the basic "laws" and principles
that apply across all the topical subfields of finance.
Allows
students to see finance as one big picture instead of as unconnected pieces.
Spreadsheet
modeling exercises Shows students how to build their own Excel templates.
Students are guided step-by-step through the implementation of beginning and advanced
models designed to teach applied aspects of finance. Icons by selected end-of-chapter
problems in the text indicate template applications found in the Prentice Hall Finance
Center CD accompanying the text.
Students
learn the important practical skill of how to build actual models.
Complete
integration of international material Global examples are integrated directly into the
text, rather than in separate boxed material.
International
material was thoughtfully integrated so that students are given the best examples at the
appropriate places. Most texts add this material in a boxed feature as an after thought.
Quick
check concept questions At critical points in the text.
Helps
students check their understanding of material previously presented.
Special
interest boxes throughout Contains newspaper clippings and applications illustrating
theory.
Encourages
students to actively use the theory in dealing with their own affairs, and in interpreting
the financial news.
End-of-chapter
problems Organizes problems by topic and level of difficulty. Offers complete
step-by-step solutions for all problems in the Instructor's Manual, in a format that
instructors can distribute to students.
Students
obtain instant feedback to concepts learned within the text.
UNIQUE
Topics found in Bodie/Merton Life-cycle saving and resource allocation over time, Law
of One Price and the Force of arbitrage, Integrated risk management and Portfolio
selection, Functions of the financial system and the dynamics of institutional change.
Unique
Technology The Prentice Hall Finance Center CD-ROM FREE in the back of the text
allows students to obtain a wealth of information to enhance their understanding of
finance. The Finance Center CD-ROM includes the following:
Fincoach Software: Generates an unlimited number of problems that allow students to
practice the math of finance. FinCoach is integrated into the end-of-chapter problems so
that students can practice in context of what they are learning.
Career Center: Explores the working life of finance professionals. There are video
interviews with finance professionals explaining what they do every day, industry surveys
of current salaries at all levels among finance professions, interview and resume writing
tips, and other advice that will help students land their first job.
Excel Spreadsheet Modeling Handbook: Students learn how to build their own Excel
templates, using actual examples from the textbook.
Direct Link to PHLIP: Prentice Hall Learning on the Internet Partnership.
CHANGES
FROM THE PRELIMINARY EDITION:
Chapter
5 is now devoted to personal financial planning 5 has been reorganized so that it is
now a self-contained primer in personal financial decision-making, using time value of
money concepts in making saving, borrowing, and investment decisions over the life cycle.
It even covers estate planning which demonstrates how to take personal taxes into account
in financial planning.
This is a
direct response to the overwhelming users who love the emphasis on practical financial
decision-making, especially the examples drawn from personal finance.
Chapter
19 (Financial Forecasting) has been combined into Chapter 3 (How to Interpret and Forecast
Financial Statements) This is a self-contained primer that requires no prior knowledge
of accounting.
Hedging,
Insuring, and Diversifying have been combined into a single chapter (11).
For
faculty who choose to teach risk management in the intro course, chapters 10 and 11 are
"showcase" chapters for the book.
A more
simplified and streamlined presentation of options and contingent claims Instead of
separate chapters on each, there is now a single chapter (Chapter 15), full of practical
examples of how options and option-pricing concepts can be applied.
For
faculty who choose to teach options in the introductory course, this is now a
"showcase" chapter for the book.
Two
full chapters on capital budgeting Chapter 6 (How to Analyze Investment Projects)
covers decision-making skills for investing in single business projects. Chapter 17
(Finance and Corporate Strategy) includes a full discussion of capital budgeting in
corporations.
This is
in response to reviewers who wanted two full chapters on this topic.
A new
section comparing the WACC, APV, and FTE investment criteria.
Demonstrates
the links between capital structure and capital budgeting. Ex. Chapter 16 (section 16.10).
I. FINANCE AND THE FINANCIAL SYSTEM.
1. What
Is Finance?
2. The Financial System.
3. How to Interpret and Forecast Financial Statements.
II. TIME AND RESOURCE ALLOCATION.
4. The
Time Value of Money and Discounted Cash Flow Analysis.
5. Life-Cycle Financial Planning.
6. How to Analyze Investment Projects.
III. VALUATION MODELS.
7.
Principles of Asset Valuation.
8. Valuation of Known Cash Flows: Bonds.
9. Valuation of Unknown Cash Flows: Stocks.
IV. RISK MANAGEMENT AND PORTFOLIO THEORY.
10. An
Overview of Risk Management and Portfolio Selection.
11. Hedging, Insuring, and Diversifying.
12. Choosing an Investment Portfolio.
V. ASSET PRICING.
13. The
Capital Asset Pricing Model.
14. Forward and Futures Prices.
15. Options and Contingent Claims.
VI.
CORPORATE FINANCE.
16.
Capital Structure.
17. Finance and Corporate Strategy.
476 pages