TAILIEUCHUNG - Lecture Fundamentals of corporate finance - Chapter 12: Some lessons from capital market history

The goal in this chapter is to provide a perspective on capital market history. After studying this chapter, you should understand: How to calculate the return on an investment, the historical returns on various important types of investments, the historical risks on various important types of investments, the implications of market efficiency. | Chapter Outline Chapter 12 Some Lessons from Capital Market History Chapter Organization Returns The Historical Record Average Returns: The First Lesson The Variability of Returns: The Second Lesson Capital Market Efficiency Summary and Conclusions CLICK MOUSE OR HIT SPACEBAR TO ADVANCE Irwin/McGraw-Hill copyright © 2002 McGraw-Hill Ryerson, Ltd. Risk, Return, and Financial Markets “. . . Wall Street shapes Main Street. Financial markets transform factories, department stores, banking assets, film companies, machinery, soft-drink bottlers, and power lines from parts of the production process . . . into something easily convertible into money. Financial markets . . . not only make a hard asset liquid, they price that asset so as to promote its most productive use.” Peter Bernstein, in his book, Capital Ideas Percentage Returns (Figure ) Percentage Returns (Figure ) (concluded) Dividends paid at Change in market end of period value over period Percentage return = Beginning market value Dividends paid at Market value end of period at end of period 1 + Percentage return = Beginning market value + + A $1 Investment in Different Types of Portfolios: 1948-1999 A $1 Investment inflation adjusted: 1948-1999 A $1 Investment in Different Types of Portfolios: 1926-1998 (US Comparison) Year-to-Year Total Returns on TSE300: 1948-1999 Year-to-Year Total Returns on Small Company Common Stocks: 1970-1999 Year-to-Year Total Returns on Bonds: 1926-1998 Year-to-Year Total Returns on Treasury Bills: 1948-1999 Using Capital Market History Now let’s use our knowledge of capital market history to make some financial decisions. Consider these questions: Suppose the current T-bill rate is 5%. An investment has “average” risk relative to a typical share of stock. It offers a 10% return. Is this a good investment? Suppose an investment is similar in risk to buying small .

• Tài chính doanh nghiệp
• Corporate finance
• Fundamentals of corporate finance
• Tài chính doanh nghiệp
• Business organization
• Financial management
• Capital market
• Intermediate corporate finance
• Lecture Intermediate corporate finance
• Corporate valuation
• Value based management
• International corporate finance
• Capital market history
• Raising capital
• Financial leverage
• Financial reporting
• Social welfare
• Forward contracts
• The stock markets
• Basic return concepts
• Portfolio theory
• Bond valuation
• Basic stock valuation
• Accounting for financial management
• Analysis of financial statements
• Financial planning
• Forecasting financial statements
• Capital budgeting
• Decision criteria
• Estimating cash flows
• Real options
• Capital structure decisions
• The levered firm
• Cash management
• Financial distress
• Hedging risk
• Warrants and convertibles
• Principles of corporate finance
• Understanding options
• Valuing options
• Financial analysis
• Financial manager
• Financial institutions