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What is the best introductory book to corporate finance you know of, for self study purposes?

  • What is the best introductory book to corporate finance you know of, for self study purposes? Sort of like corporate finance for dummies . I am looking for a couple of books or softwares that not only can explain things well , but also have plenty of practice exercises and correct step by step solutions , for self study purposes. If necessary I will also get hold of their instructor's manuals and study guides. I have talked to some university lecturers and tutors and a couple of websites and received the following suggestions: Fundamentals of Financial Management (Hardcover) by Eugene F. Brigham, Joel F. Houston Fundamentals of Corporate Finance Standard Edition by Stephen A. Ross, Randolph W Westerfield, Bradford D Jordan Essentials of Corporate Finance + Self Study CD-ROM + PowerWeb (Hardcover) by Stephen A. Ross, Randolph W Westerfield, Bradford D Jordan, Bradford Jordan Please note that I am interested in learning financial concepts that make use of time value of money . e.g. compound interest, present values of loans and investments, the similarities and differences and relationships among annuities, mortgages, and retirement plans . Introduction to the concept of share valuation, concept of risk and return and application to portfolio theory, pricing of risky securities (CAPM), evaluation of investment proposals, concept of cost of capital, corporate finance policy including capitalstructure and dividend decisions, mergers and takeovers and valuation and application of derivative securities. Integration of finance theory and spreadsheet techniques. Financial ratios, leverage analysis, cost of capital, financial mathematics, capital budgeting, risk and statistical analysis, portfolio theory, macros and visual basic. Quantifying and programming financial problems. Thanks a million.

  • Answer:

    Here are the standard texts based on my own experience working as an M&A banker: Corporate finance: http://www.amazon.com/exec/obidos/ASIN/0073130826/metafilter-20/ref=nosim/ Financial Accounting: http://www.amazon.com/exec/obidos/ASIN/0471661805/metafilter-20/ref=nosim/ The two books above are the two textbooks I kept from college and were the two books handed to every new investment banking analyst during the first day of training at the two bulge-bracket banks I've worked for. If you only get one book, I'd get the Kieso Weygandt book. Other standard texts: Fixed Income: http://www.amazon.com/exec/obidos/ASIN/0071440992/metafilter-20/ref=nosim/ - if you ever plan to work in fixed income, this is your bible. Even if you don't, it's very useful to own. Derivatives: http://www.amazon.com/exec/obidos/ASIN/0131499084/metafilter-20/ref=nosim/ Mergers & Acquisitions: http://www.amazon.com/exec/obidos/ASIN/0070526605/metafilter-20/ref=nosim/. The link is to the primary M&A book, but there are other books in series that cover M&A due diligence and structuring. I've found these books to be somewhat useful, but as the title says, M&A is more art than science and the real learning is to be done on the job. Other books: I have a photocopy of http://www.amazon.com/exec/obidos/ASIN/007325858X/metafilter-20/ref=nosim/ that I found to be pretty interesting. I wouldn't get this over the Brealey Meyers text, but it does provide some interesting looks at more detailed financial analysis. This is what I have on my bookshelf at work. I'll try to think of more.

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studentguru http://ask.metafilter.com/mefi/35457#552041 "Is there a website where corporate finance students hang out?" Haha, yeah, they hang out at the http://www.vault.com/community/mb/mb_home.jsp and talk about which banks pay the highest bonuses and whether or not your should wear a Hermes tie during your first year out of undergrad. Greedy fuckers.

mullacc

Besides Fabozzi, the book on bonds that I'd suggest is http://www.amazon.com/exec/obidos/ASIN/1576601595/metafilter-20/ref=nosim/ by Homer and Leibowitz, for an introduction to bonds/interest rates/time value.

milkrate

I find that for those people who have some idea about time value of money, start with (1) chapter 3 of http://pages.stern.nyu.edu/~adamodar/ Corporate Finance: Theory and Practice - 2nd Edition "Time Value of money" pdf and at the same time, (2) Read "The Fast Forward MBA in Business Math" (Paperback) by Peter Garrity

studentguru

Before finish reading "The Fast Forward MBA in Business Math" , try reading the chapter on Risk and Rate of Return in "Fundamentals of Financial Management" by Eugene F. Brigham, Joel F. Houston about where concepts like standard deviation and variance and normal distribution come in in terms of evaluating two competing potential investments.

studentguru

What's your goal? Do you want to get a job (in what part of the industry?), become an educated investor, work in academia?

mullacc

Another great resource is http://pages.stern.nyu.edu/~adamodar/. He's a prof at NYU and an author of some solid textbooks. The website has plenty of reading material.

mullacc

Higgins is the stock CorpFin book at most MBA programs nowadays, but it is almost purely Corporate Finance, and it touches on only some of the themes you mentioned. Bodie, Kane and Marcus' Investments is a really thick book whose older editions can be had pretty cheaply. While most of the things you list in your question deal with finance from a company perspective, BKM deals with those topics from a market perspective, and is IMO all-encompassing. When I forget the differences between Modified and Macaulay duration, for instance, it's the first place I turn. Fabozzi is more thorough (and deserving of its "bible" status) as mullacc notes, but far narrower. As far as programming goes, you can solve 99% of financial problems with a Monte Carlo program and Excel (especially if you can use VBA). Best intro book on how to use Excel is by http://finance.wharton.upenn.edu/~benninga/mit.html, who happens to be a fine gentleman. As far as hardcore Fin Math goes, I'd poke around the http://www.haas.berkeley.edu/MFE/index.html site, and see what their kids are reading.

Kwantsar

Thank you very much for your advice so far. I had attended a couple of classes on corporate finance 15 years ago and I find that I get excited about time value of money. And I would like to explore working on that excitement. My goal is to learn enough to make my own investment decisions in many kinds of instruments. Or at least can hold a conversation with investment analysts when they work on my money one day :) Yah , one day, if I live long enough :) I already have a background in financial accounting and some knowledge of management accounting. I have no plan to go back to school yet. I will do that only after I have the foundations of financial mathematics under my belt. But I am keen to learn to learn online and with great introductory books. The challenge with most corporate finance textbooks is they assume we are all mathematics wizards and given a problem and a solution can derive the step by step process on our own. Thanks a million.

studentguru

Is there a website where corporate finance students hang out?

studentguru

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