FIN 3104 Chapter Notes - Chapter 9: Current Yield, Private Placement, Capital Budgeting

• School: Virginia Tech
• Department: Finance, Insurance, Business Law
• Course: FIN 3104
• Professor: A J Keown

Document Summary

Investment banker performs three basic functions: 1. Underwriting- assuming a risk: syndicate- a group of other investment bankers that are invited to help buy and resell the issue, 2. Distributing- syndicate must get them into the hands of investors: 3. Dete(cid:396)(cid:373)i(cid:374)e (cid:271)o(cid:374)dholde(cid:396) (cid:272)ash flo(cid:449)s, the a(cid:373)ou(cid:374)t a(cid:374)d ti(cid:373)i(cid:374)g of the (cid:271)o(cid:374)d"s promised or contractual interest and principal payments to the bond holders: 2. Estimate the appropriate discount rate on a bond of similar risk, discount rate is the return the bond will yield if it is held to maturity and all bond payments are made: 3. Cal(cid:272)ulate the p(cid:396)ese(cid:374)t (cid:448)alue of the (cid:271)o(cid:374)d"s i(cid:374)te(cid:396)est a(cid:374)d p(cid:396)i(cid:374)(cid:272)ipal pa(cid:455)(cid:373)e(cid:374)ts from step 1. Chp 11- pg 330-334, 340-346, 352-353, 355-357 (not discounted pay back period) 330-334: an overview of capital budgeting, lessons from disneyland, 1. Capital (cid:271)udgeti(cid:374)g de(cid:272)isio(cid:374)s a(cid:396)e (cid:272)(cid:396)iti(cid:272)al i(cid:374) defi(cid:374)i(cid:374)g a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s (cid:271)usi(cid:374)ess: 2. Very large investments frequently consist of many smaller investment decisions that define a business strategy: 3.