Solutions Manual to Accompany Principles of Corporate Finance

Why I love it: It is well written, it has many examples, it covers many subjects, it has a sense of humor (many reviewers do not have a sense of humor) and I found myself referencing this book as I took subsequent quantitative-oriented classes in my MBA program.

Why some people may hate it: 1. European MBA programs are much more quantitatively oriented. The MBAs from Belgium and London tell me that 50% of their grade in most classes requires proving or deriving a formula. This book won't tell you how to do that or address those hairy mathmatical models. 2. Finance practitioners, options traders, investment bankers aren't wild about this book. It is not in-depth quantitative in its nature. I don't believe practitioners should be reading a general book such as this. If they are reading this book, then this should be only one of several works they should be reading. 3. Finance is hard work! Most of my MBA peers were blindsided by the amount of effort required by the class (as I was). Even the Sr. financial analysts in my class were challenged by the work. If you're not sharp on your math skills, your finance class will make you choke! Any book that would purport to tell you everything you need to know for a basic corp. finance class would be a multivolume set! Don't demand miracles from one textbook!

Do yourself a favor: If you do use this book or subsequent volumes, purchase the study guide and solutions guide as well! And attend teaching assistant sessions if you can!

About CAPM, APT and WACC: they are addressed in this book. Maybe not to the extent that they should be, but then again, this book is a survey of issues. My prof spent lots of time on those subjects even though the book did not.


The best book on corporate finance that money can buy.   January 6, 2000
61 out of 66 found this review helpful

I first came across the second edition of this book while I was an MBA student in the mid-1980s. At that time, I thought that this book was superb. Since that time, I have gone on to get a Ph.D. in Finance and currently teach MBA students and have taught advanced undergraduate students. I have consistently chosen to use this textbook simply because it's the best textbook in corporate finance that money can buy. Brealey and Myers raised the bar phenomenally when they published the first edition of their book. Every time they come out with a new edition they update the contents with the new research that's published (they exercize great wisdom in judging what new research is important--the finance community can thank them for that). The pedagogy is excellent, the exercizes are great, the examples are relevant, and, despite what some of the other reviewers have stated, the humor is good (heck, this is the only corporate finance textbook that even has humor in it).

What about the customer reviews that have trashed this book? Based on my number of years of teaching experience, I have found that some students have a difficult time with this book. I also find that these students are ill-prepared to take a course in corporate finance and don't have an understanding of basic statistics or accounting or economics. So if you are ill-prepared for a rigorous course in corporate finance, this book is not for you. As for the reviewer who claims that the CAPM and arbitrage pricing theory are missing....that's simply a false statement.

Bottom line: This is a fantastic book and it is used as a textbook in core MBA finance courses at all the good universities like Chicago, Harvard, MIT, Wharton, etc.


A consumer's review is only as informed as the consumer   May 21, 2001
30 out of 32 found this review helpful

It's disappointing to see so many complaints from other reviewers about what is the most eloquent and useful fundamental corporate finance text. I've used the Ross & Westerfield text, too, but B&M sets the standard.

B&M is an excellent book... and I say this six years after my initial corp fin course in the Chicago MBA program. I've been working in the field now for five years in several capacities and still use this book regularly. In fact, when I drafted an in-house valuation course for my FORTUNE-5 employer recently I found myself returning to B&M repeatedly to review first principles.

Corp. finance is (and should be) inaccessible to someone unwilling to master statistics, financial accounting and the theoretical foundation provided by Miller & Modigiliani, Markowitz, Fama, Roll et. al. Yet it's not a science; it is an art informed by rational academic inquiry and the invaluable feedback of practitioners. That's what makes it beautiful.

Those lacking the diligence to wade through the thought problems of the M&M theorems, the development of CAPM and APT, the relevance and shortcomings of DCF analysis, and guidelines for proper investment economics can't possibly expect to practice finance intelligently.

And that's my biggest complaint about financial professionals. Many don't understand the genesis of economic value because they don't grasp the fundamental arguments that B&M make so clearly. At a time when the blather of CNBC reigns, Wall Street analysts still hype EPS and stock splits, and everyone from stockbroker to accountant calls himself a financial analyst this text is more necessary than ever. Learn it cover to cover and you're ready to move on to further complexity in the field. And there's a lot of further complexity in the field.

One final point... the bane of MBA programs is the baying of students for "real world examples." Students need to understand that a grasp of fundamental theory, peer reviewed and tested, forms the foundation necessary to work intelligently in finance. Otherwise we're just suits flipping switches on a powerful machine the intricacies and nuances of which we can't even begin to grasp. And destroying a lot of economic value in the process.


Still the best corporate finance intro book   June 7, 2000
Gadgester (Mother Earth)
25 out of 26 found this review helpful

The new edition of Brealey & Myers's classic introductory text on corporate finance is still the best. This is the book used by top universities and business schools for a first course on capital markets and corporate finance. The strengths of the book are: breadth (see the table of contents for the large number of topics covered), practicality (you learn the theory and also how to apply theory in practice), and clarity (very easy to follow). The student does not need prior knowledge to understand the materials.

When I worked on Wall Street all my colleagues had a copy of Brealey and Myers. The new edition updates the text (I have not found any major changes). A must-have for those interested in the basics of corporate finance. Also a good refresher for seasoned professionals (but you already knew that!).


Excellant book to get the bigger picture of what CF is about   October 3, 1999
23 out of 25 found this review helpful

Do not be too confused by comments of other reviewers. This book is definitely 'not' the bible for people having finance as a major. What the book presents, is an excellant introduction to understand the principles of corporate finance. And nothing more is claimed by the authors anyway. I have used the book during my first course in finance at one of the Top-3 American Business Schools. The book provided me with an excellant introduction over a variety of CF topics, though I have to admit that (having a Ph.D. in engineering) I missed the math part in it. So, do not look for proofs, etc., but just use it to get the bigger picture of what CF is about. If you are seriously interested in pursueing a carrier in CF, you will anyway come across other books with more mathematical depth. If it turns out that CF is nothing for you, you can still use the book as reference later on in your professional carrier, since it is easy to look up things without remembering heavy-math stuff.