Topics Covered SHow Firms Organize Their Investment Process Some\What If Questions Sensitivity analysis Break Even Analysis SFlexibility in Capital Budgeting Decision Trees Options
Topics Covered The Market for Corporate Control Sensible Motives for mMergers Dubious Reasons for Mergers SEvaluating Mergers Merger Tactics SLeveraged Buy-Outs Mergers and the Economy IrwinMcGraw-Hill The McGraw-Hill Companies, Inc., 2001
Market Portfolio-Portfolio of all assets in the economy. In practice a broad stock marke index, such as the S&P Composite, is used to represent the market. Beta- Sensitivity of a stock's return to the return on the market portfolio
When there are no taxes and capital markets function well, it makes no difference whether the firm borrows or individual shareholders borrow. Therefore, the market value of a company does not depend on its capital structure