Frequently Asked Questions in Corporate Finance

The definitive question and answer guide to understanding corporate finance From the team behind the popular corporate finance website, Vernimmen.com comes a concise guide to the subject, presented in an easy-to-use, highly accessible "question and answer" format. An essential reference for students of corporate finance and practising corporate financiers alike, Frequently Asked Questions in Corporate Finance answers key questions in financial engineering, valuation, financial policy, cost of capital, financial analysis, and financial management. Covering both the theory and practice of corporate finance, the book demonstrates how financial theory can be put to use solving practical problems. What advantages are there to a business looking to spin off its divisions into subsidiaries? Is there a formula that can be used to determine the change in normalised free cash flows? What are the possible reasons behind a share buyback? What are the pros and cons of off-market share buy-back? Filled with the answers to all of the most common, and not so common, questions about corporate finance, the book presents authoritative, reliable information from a respected team of experts from the banking, corporate, and academic worlds.

1 Frequently Asked Questions 1 2 Topics 409 50 years of research in finance 410 Ten deadly mistakes in corporate finance 412 Five mistakes in corporate valuation 423 M&A: Six mistakes to be avoided 429 Rating agencies 432 Credit scoring 435 Behavioral finance: are investors really rational? 438 Micro-finance: helping the poor 444 Project finance 449 Corporate finance in Europe: confronting theory with practice 454 Capital markets: some useful definitions 457 Transaction multiples: before and during the crisis 459 The making of an investment banker 469 Corporate finance books 472 Brainteasers – PART I 475 Brainteasers – PART II 478 Answers 481 True or false: test yourself 482 Answers 484 Crossword 487 Index 493