About our authors Jonathan Berk is the A.P. Giannini Professor of Finance at the Graduate School of Business, Stanford University and is a Research Associate at the National Bureau of Economic Research. Before coming to Stanford, he was the Sylvan Coleman Professor of Finance at Haas School of Business at the University of California, Berkeley. Prior to earning his PhD, he worked as an Associate at Goldman Sachs (where his education in finance really began).Professor Berk's research interests in finance include corporate valuation, capital structure, mutual funds, asset pricing, experimental economics, and labor economics. His work has won a number of research awards including the Stephen A. Ross Prize in Financial Economics, TIAA-CREF Paul A. Samuelson Award, the Smith Breeden Prize, Best Paper of the Year in The Review of Financial Studies, and the FAME Research Prize. His paper, “A Critique of Size-Related Anomalies,” was selected as one of the 2 best papers ever published in The Review of Financial Studies. In recognition of his influence on the practice of finance he has received the Bernstein-Fabozzi/Jacobs Levy Award, the Graham and Dodd Award of Excellence, and the Roger F. Murray Prize. He served 2 terms as an Associate Editor of the Journal of Finance, and a term as a director of the American Finance Association, the Western Finance Association, and academic director of the Financial Management Association. He is a Fellow of the Financial Management Association and a member of the advisory board of the Journal of Portfolio Management.Born in Johannesburg, South Africa, Professor Berk has 2 daughters, and is an avid skier and biker.Peter DeMarzo is the John G. McDonald Professor of Finance at the Graduate School of Business, Stanford University. He is the former President of the American Finance Association and a Research Associate at the National Bureau of Economic Research. He teaches MBA and PHD courses in Corporate Finance and Financial Modeling. Professor DeMarzo has also taught at the Haas School of Business and the Kellogg Graduate School of Management. He is a Fellow of the Econometric Society and former National Fellow at the Hoover Institution.Professor DeMarzo received the Sloan Teaching Excellence Award at Stanford and the Earl F. Cheit Outstanding Teaching Award at U.C. Berkeley. Professor DeMarzo has served as an Associate Editor for The Review of Financial Studies, Financial Management, and the B.E. Journals in Economic Analysis and Policy, as well as Vice President and director of the American Finance Association and President of the Western Finance Association. Professor DeMarzo's research is in the area of corporate finance, asset securitization, and contracting, as well as market structure and regulation. His recent work has examined issues of the optimal design of contracts and securities, leverage dynamics and the role of bank capital regulation, and the influence of information asymmetries on stock prices and corporate investment. He has received numerous awards including the Western Finance Association Corporate Finance Best-Paper Award, the Charles River Associates Best-Paper Award, the Barclays Global Investors/Michael Brennan Best-Paper of the Year Award from The Review of Financial Studies, and the Brattle Prize for the best corporate finance paper from the Journal of Finance.Professor DeMarzo was born in Whitestone, New York, and is married with 3 boys. He and his family enjoy hiking, biking and skiing.Jarrad Harford is the Paul Pigott - PACCAR Professor of Finance at the University of Washington's Foster School of Business. Prior to Washington, Professor Harford taught at the University of Oregon. He earned his PhD in Finance with a minor in Organizations and Markets from the University of Rochester. Professor Harford has taught the core undergraduate finance course, Business Finance, for 25 years, as well as an elective in Mergers and Acquisitions, and “Finance for Non-financial Executives” in the executive education program. He has won numerous awards for his teaching, including the UW Undergraduate Finance Professor of the Year (2010, 2012, 2016, 2021, 2022), Panhellenic/Interfraternity Council Business Professor of the Year Award (2011, 2013), ISMBA Excellence in Teaching Award (2006), and the Wells Fargo Faculty Award for Undergraduate Teaching (2005). Professor Harford is currently a Managing Editor of the Journal of Financial and Quantitative Analysis, and served as an Associate Editor for the Journal of Financial Economics, and the Journal of Corporate Finance. His main research interests are understanding the dynamics of merger and acquisition activity as well as the interaction of corporate cash management policy with governance, payout and global tax considerations.Professor Harford was born in Pennsylvania, is married, and has 2 sons. He and his family enjoy traveling, hiking and skiing

• PART 1: INTRODUCTION Corporate Finance and the Financial ManagerIntroduction to Financial Statement AnalysisPART 2: INTEREST RATES AND VALUING CASH FLOWS Time Value of Money: An IntroductionTime Value of Money: Valuing Cash Flow StreamsInterest RatesBondsStock ValuationPART 3: VALUATION AND THE FIRM Investment Decision RulesFundamentals of Capital BudgetingStock Valuation: A Second LookPART 4: RISK AND RETURN Risk and Return in Capital MarketsSystematic Risk and the Equity Risk PremiumThe Cost of CapitalPART 5: LONG-TERM FINANCING Raising Equity CapitalDebt FinancingPART 6: CAPITAL STRUCTURE AND PAYOUT POLICY Capital StructurePayout PolicyPART 7: FINANCIAL PLANNING AND FORECASTING Financial Modeling and Pro Forma AnalysisWorking Capital ManagementShort-Term Financial PlanningPART 8: SPECIAL TOPICS Option Applications and Corporate FinanceMergers and AcquisitionsInternational Corporate FinanceCHAPTERS ON THE WEB LeasingInsurance and Risk ManagementCorporate Governance

About our authors Jonathan Berk is the A.P. Giannini Professor of Finance at the Graduate School of Business, Stanford University and is a Research Associate at the National Bureau of Economic Research. Before coming to Stanford, he was the Sylvan Coleman Professor of Finance at Haas School of Business at the University of California, Berkeley. Prior to earning his PhD, he worked as an Associate at Goldman Sachs (where his education in finance really began).Professor Berk's research interests in finance include corporate valuation, capital structure, mutual funds, asset pricing, experimental economics, and labor economics. His work has won a number of research awards including the Stephen A. Ross Prize in Financial Economics, TIAA-CREF Paul A. Samuelson Award, the Smith Breeden Prize, Best Paper of the Year in The Review of Financial Studies, and the FAME Research Prize. His paper, “A Critique of Size-Related Anomalies,” was selected as one of the 2 best papers ever published in The Review of Financial Studies. In recognition of his influence on the practice of finance he has received the Bernstein-Fabozzi/Jacobs Levy Award, the Graham and Dodd Award of Excellence, and the Roger F. Murray Prize. He served 2 terms as an Associate Editor of the Journal of Finance, and a term as a director of the American Finance Association, the Western Finance Association, and academic director of the Financial Management Association. He is a Fellow of the Financial Management Association and a member of the advisory board of the Journal of Portfolio Management.Born in Johannesburg, South Africa, Professor Berk has 2 daughters, and is an avid skier and biker.Peter DeMarzo is the John G. McDonald Professor of Finance at the Graduate School of Business, Stanford University. He is the former President of the American Finance Association and a Research Associate at the National Bureau of Economic Research. He teaches MBA and PHD courses in Corporate Finance and Financial Modeling. Professor DeMarzo has also taught at the Haas School of Business and the Kellogg Graduate School of Management. He is a Fellow of the Econometric Society and former National Fellow at the Hoover Institution.Professor DeMarzo received the Sloan Teaching Excellence Award at Stanford and the Earl F. Cheit Outstanding Teaching Award at U.C. Berkeley. Professor DeMarzo has served as an Associate Editor for The Review of Financial Studies, Financial Management, and the B.E. Journals in Economic Analysis and Policy, as well as Vice President and director of the American Finance Association and President of the Western Finance Association. Professor DeMarzo's research is in the area of corporate finance, asset securitization, and contracting, as well as market structure and regulation. His recent work has examined issues of the optimal design of contracts and securities, leverage dynamics and the role of bank capital regulation, and the influence of information asymmetries on stock prices and corporate investment. He has received numerous awards including the Western Finance Association Corporate Finance Best-Paper Award, the Charles River Associates Best-Paper Award, the Barclays Global Investors/Michael Brennan Best-Paper of the Year Award from The Review of Financial Studies, and the Brattle Prize for the best corporate finance paper from the Journal of Finance.Professor DeMarzo was born in Whitestone, New York, and is married with 3 boys. He and his family enjoy hiking, biking and skiing.Jarrad Harford is the Paul Pigott - PACCAR Professor of Finance at the University of Washington's Foster School of Business. Prior to Washington, Professor Harford taught at the University of Oregon. He earned his PhD in Finance with a minor in Organizations and Markets from the University of Rochester. Professor Harford has taught the core undergraduate finance course, Business Finance, for 25 years, as well as an elective in Mergers and Acquisitions, and “Finance for Non-financial Executives” in the executive education program. He has won numerous awards for his teaching, including the UW Undergraduate Finance Professor of the Year (2010, 2012, 2016, 2021, 2022), Panhellenic/Interfraternity Council Business Professor of the Year Award (2011, 2013), ISMBA Excellence in Teaching Award (2006), and the Wells Fargo Faculty Award for Undergraduate Teaching (2005). Professor Harford is currently a Managing Editor of the Journal of Financial and Quantitative Analysis, and served as an Associate Editor for the Journal of Financial Economics, and the Journal of Corporate Finance. His main research interests are understanding the dynamics of merger and acquisition activity as well as the interaction of corporate cash management policy with governance, payout and global tax considerations.Professor Harford was born in Pennsylvania, is married, and has 2 sons. He and his family enjoy traveling, hiking and skiing

• PART 1: INTRODUCTION Corporate Finance and the Financial ManagerIntroduction to Financial Statement AnalysisPART 2: INTEREST RATES AND VALUING CASH FLOWS Time Value of Money: An IntroductionTime Value of Money: Valuing Cash Flow StreamsInterest RatesBondsStock ValuationPART 3: VALUATION AND THE FIRM Investment Decision RulesFundamentals of Capital BudgetingStock Valuation: A Second LookPART 4: RISK AND RETURN Risk and Return in Capital MarketsSystematic Risk and the Equity Risk PremiumThe Cost of CapitalPART 5: LONG-TERM FINANCING Raising Equity CapitalDebt FinancingPART 6: CAPITAL STRUCTURE AND PAYOUT POLICY Capital StructurePayout PolicyPART 7: FINANCIAL PLANNING AND FORECASTING Financial Modeling and Pro Forma AnalysisWorking Capital ManagementShort-Term Financial PlanningPART 8: SPECIAL TOPICS Option Applications and Corporate FinanceMergers and AcquisitionsInternational Corporate FinanceCHAPTERS ON THE WEB LeasingInsurance and Risk ManagementCorporate Governance

About our authors Jonathan Berk is the A.P. Giannini Professor of Finance at the Graduate School of Business, Stanford University and is a Research Associate at the National Bureau of Economic Research. Before coming to Stanford, he was the Sylvan Coleman Professor of Finance at Haas School of Business at the University of California, Berkeley. Prior to earning his PhD, he worked as an Associate at Goldman Sachs (where his education in finance really began).Professor Berk's research interests in finance include corporate valuation, capital structure, mutual funds, asset pricing, experimental economics, and labor economics. His work has won a number of research awards including the Stephen A. Ross Prize in Financial Economics, TIAA-CREF Paul A. Samuelson Award, the Smith Breeden Prize, Best Paper of the Year in The Review of Financial Studies, and the FAME Research Prize. His paper, “A Critique of Size-Related Anomalies,” was selected as one of the 2 best papers ever published in The Review of Financial Studies. In recognition of his influence on the practice of finance he has received the Bernstein-Fabozzi/Jacobs Levy Award, the Graham and Dodd Award of Excellence, and the Roger F. Murray Prize. He served 2 terms as an Associate Editor of the Journal of Finance, and a term as a director of the American Finance Association, the Western Finance Association, and academic director of the Financial Management Association. He is a Fellow of the Financial Management Association and a member of the advisory board of the Journal of Portfolio Management.Born in Johannesburg, South Africa, Professor Berk has 2 daughters, and is an avid skier and biker.Peter DeMarzo is the John G. McDonald Professor of Finance at the Graduate School of Business, Stanford University. He is the former President of the American Finance Association and a Research Associate at the National Bureau of Economic Research. He teaches MBA and PHD courses in Corporate Finance and Financial Modeling. Professor DeMarzo has also taught at the Haas School of Business and the Kellogg Graduate School of Management. He is a Fellow of the Econometric Society and former National Fellow at the Hoover Institution.Professor DeMarzo received the Sloan Teaching Excellence Award at Stanford and the Earl F. Cheit Outstanding Teaching Award at U.C. Berkeley. Professor DeMarzo has served as an Associate Editor for The Review of Financial Studies, Financial Management, and the B.E. Journals in Economic Analysis and Policy, as well as Vice President and director of the American Finance Association and President of the Western Finance Association. Professor DeMarzo's research is in the area of corporate finance, asset securitization, and contracting, as well as market structure and regulation. His recent work has examined issues of the optimal design of contracts and securities, leverage dynamics and the role of bank capital regulation, and the influence of information asymmetries on stock prices and corporate investment. He has received numerous awards including the Western Finance Association Corporate Finance Best-Paper Award, the Charles River Associates Best-Paper Award, the Barclays Global Investors/Michael Brennan Best-Paper of the Year Award from The Review of Financial Studies, and the Brattle Prize for the best corporate finance paper from the Journal of Finance.Professor DeMarzo was born in Whitestone, New York, and is married with 3 boys. He and his family enjoy hiking, biking and skiing.Jarrad Harford is the Paul Pigott - PACCAR Professor of Finance at the University of Washington's Foster School of Business. Prior to Washington, Professor Harford taught at the University of Oregon. He earned his PhD in Finance with a minor in Organizations and Markets from the University of Rochester. Professor Harford has taught the core undergraduate finance course, Business Finance, for 25 years, as well as an elective in Mergers and Acquisitions, and “Finance for Non-financial Executives” in the executive education program. He has won numerous awards for his teaching, including the UW Undergraduate Finance Professor of the Year (2010, 2012, 2016, 2021, 2022), Panhellenic/Interfraternity Council Business Professor of the Year Award (2011, 2013), ISMBA Excellence in Teaching Award (2006), and the Wells Fargo Faculty Award for Undergraduate Teaching (2005). Professor Harford is currently a Managing Editor of the Journal of Financial and Quantitative Analysis, and served as an Associate Editor for the Journal of Financial Economics, and the Journal of Corporate Finance. His main research interests are understanding the dynamics of merger and acquisition activity as well as the interaction of corporate cash management policy with governance, payout and global tax considerations.Professor Harford was born in Pennsylvania, is married, and has 2 sons. He and his family enjoy traveling, hiking and skiing

• PART 1: INTRODUCTION Corporate Finance and the Financial ManagerIntroduction to Financial Statement AnalysisPART 2: INTEREST RATES AND VALUING CASH FLOWS Time Value of Money: An IntroductionTime Value of Money: Valuing Cash Flow StreamsInterest RatesBondsStock ValuationPART 3: VALUATION AND THE FIRM Investment Decision RulesFundamentals of Capital BudgetingStock Valuation: A Second LookPART 4: RISK AND RETURN Risk and Return in Capital MarketsSystematic Risk and the Equity Risk PremiumThe Cost of CapitalPART 5: LONG-TERM FINANCING Raising Equity CapitalDebt FinancingPART 6: CAPITAL STRUCTURE AND PAYOUT POLICY Capital StructurePayout PolicyPART 7: FINANCIAL PLANNING AND FORECASTING Financial Modeling and Pro Forma AnalysisWorking Capital ManagementShort-Term Financial PlanningPART 8: SPECIAL TOPICS Option Applications and Corporate FinanceMergers and AcquisitionsInternational Corporate FinanceCHAPTERS ON THE WEB LeasingInsurance and Risk ManagementCorporate Governance