CORPORATE FINANCE
THIRD EDITION

JONATHAN BERK
STANFORD UNIVERSITY

PETER DEMARZO
STANFORD UNIVERSITY


Brief Contents
PART 1
INTRODUCTION
Chapter 1 The Corporation 2
Chapter 2 Introduction to Financial Statement Analysis 21
Chapter 3 Financial Decision Making and the Law of One Price 59
PART 2
TIME, MONEY,
AND INTEREST RATES
Chapter 4 The Time Value of Money 96
Chapter 5 Interest Rates 141
Chapter 6 Valuing Bonds 169
PART 3
VALUING PROJECTS
AND FIRMS
Chapter 7 Investment Decision Rules 206
Chapter 8 Fundamentals of Capital Budgeting 233
Chapter 9 Valuing Stocks 271
PART 4
RISK AND RETURN
Chapter 10 Capital Markets and the Pricing of Risk 312
Chapter 11 Optimal Portfolio Choice and the Capital Asset
Pricing Model 351
Chapter 12 Estimating the Cost of Capital 400
Chapter 13 Investor Behavior and Capital Market Efficiency 437
PART 5
CAPITAL STRUCTURE
Chapter 14 Capital Structure in a Perfect Market 478
Chapter 15 Debt and Taxes 508
Chapter 16 Financial Distress, Managerial Incentives,
and Information 539
Chapter 17 Payout Policy 584
PART 6
ADVANCED VALUATION
Chapter 18 Capital Budgeting and Valuation with Leverage 626
Chapter 19 Valuation and Financial Modeling: A Case Study 674
PART 7
OPTIONS
Chapter 20 Financial Options 706
Chapter 21 Option Valuation 738
Chapter 22 Real Options 773
PART 8
LONG-TERM FINANCING
Chapter 23 Raising Equity Capital 806
Chapter 24 Debt Financing 836
Chapter 25 Leasing 859
PART 9
SHORT-TERM FINANCING
Chapter 26 Working Capital Management 886
Chapter 27 Short-Term Financial Planning 908
PART 10
SPECIAL TOPICS
Chapter 28 Mergers and Acquisitions 930
Chapter 29 Corporate Governance 961
Chapter 30 Risk Management 985
Chapter 31 International Corporate Finance 1026