Uncertainty, Default, and Risk• We continue to assume perfect markets, including: 1. No differences in opinion.2. No taxes.3. No transaction costs.4. No big sellers/buyers•But we now allow uncertainty. So, we do not know in advance exactly what will happen in the future. We now need to predict the future. For this, we need (just a little!) statistics.07/15/11 20:30ReferencesCorporate Finance: An Introduction(Welch, 2009, Prentice Hall)Chapter 6
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