ActSc 372 Spring 2012
CHAPTER 12
An Alternative View
of Risk and Return:
The Arbitrage
1
CHAPTER OUTLINE
Introduction
Announcements, surprises and expected returns
Factor models
Systematic risks vs unsystematic risks
APT vs CAPM
2
Arbitrage Pricing Theory
ActSc 372 Spring 2012
CHAPTER 11
Risk and Return:
The Capital Asset
Pricing Model
1
CHAPTER OUTLINE
Expected Return, Variance, and Covariance
The Risk and Return for Portfolios
The Efficient Set for Two Assets, and N Many
Securities
Diversification
Riskle
ActSc 372 Spring 2012
CHAPTER 15
Long Term Financing:
An Introduction
1
CHAPTER OUTLINE
Long-term Financing Sources:
Common Stock
Long-Term Debt
Preferred Stock
Patterns of Financing
Summary and Conclusions
2
Overview
When a company wants to increase its
ActSc 372 Spring 2012
CHAPTER 16
Capital Structure
Basic Concepts
1
CHAPTER OUTLINE
The Capital-Structure Question and the Pie Model
The Impact of Financial Leverage on the Firm Value
EPS
ROE
Modigliani and Miller (MM): Propositions I and II
No Taxes
Wit
ActSc 372 Spring 2012
CHAPTER 17
Capital Structure: Limits
to the Use of Debt
1
CHAPTER OUTLINE
Cost of Financial Distress
Trade-off theory of capital structure
Signalling
Free Cash Flow Hypothesis
The Pecking-Order Theory
Personal Taxes and its impact on