Questions tagged [capital-structure]
The capital-structure tag has no usage guidance.
14 questions
3
votes
1
answer
1k
views
Modigliani & Miller with taxes: how is this equation derived?
I am looking at Modigliani & Miller Proposition II with corporate taxes. According to Hillier et al. "Fundamentals of Corporate Finance" (3rd ed., 2017) (here is a link to a slightly ...
- 2,611
2
votes
1
answer
754
views
Understanding Modigliani & Miller: different graphs in different textbooks
I am comparing two textbook's presentations of capital structure and Modigliani & Miller propositions. The first one is Berk & DeMarzo "Corporate Finance" (5th global ed., 2019), the ...
- 2,611
1
vote
2
answers
77
views
Companies mutually owning each other
There is no logical flaw in having two companies A and B mutually owning each other. Company A may hold X% of the shares of company B, and company B may hold Y% of the shares of company A. I assume ...
1
vote
1
answer
81
views
Why does Dodd-Frank/Basel make large cash piles unattractive?
As several major banks disclosed their financial reports recently, there seems to be much interest in the financial community as to the implications of the large cash piles at US commercial banks. The ...
- 1,101
2
votes
2
answers
63
views
Solving a problem using CAPM and capital structure theory
I am given the following problem:
A firm currently owns assets worth $4$ milllion dollars that have a beta of 1. The risk-free interest rate is 10% and the market risk premium is 8%. Suppose the firm ...
- 121
1
vote
1
answer
32
views
How are assets distributed by types of organisations? [closed]
How wealth, assets or capital (measured in terms of revenues, assets, equity, etc.) is distributed among the various types of organizations (e.g. State, public companies, private conpanies, ...
- 190
2
votes
0
answers
65
views
Why is United States Gross Capital Formation per capita so far ahead of the big 3 European economies?
So, I was pondering the weakness of the UK economy (I am British) and its lagging productivity performance. I was thinking that capital deployed per worker would be an explanatory variable.
...
- 223
1
vote
1
answer
39
views
Does good geographical location count as land in economics?
For example, the North pole is in the northern part of the earth and is very cold, making it suitable to build a site to study polar bears. Is the cold and northern location of north pole counted as ...
- 51
2
votes
1
answer
55
views
How does an UHN individual leverage their wealth? [closed]
How does an UHN individual leverage their wealth? Do they in fact do so, and should for example Bill Gates' 80 billion be understood as 800 - 900 billion dollar if he leverage his wealth 10 x?
...
- 71
1
vote
1
answer
86
views
Is the lack of information on customer behaviour good for banks?
Discussing chapter 18 on Microeconomic Theory Basic Principles and Extensions - Nicholson and Snyder book - regarding Asymmetric information a student raise an interesting point of view regarding the ...
- 133
4
votes
2
answers
228
views
GMM Estimation of a parameter from Intratemporal Euler of capital constraints
I'm trying to estimate $\lambda$ from this intratemporal Euler equation:
$\left[ \dfrac{C_t^{-\sigma}}{C_t^{*-\sigma}} \dfrac{P_t}{S_t P_t^*} \right]^{\lambda} \left[ \dfrac{\bar{P_t} Y_t - \Delta (...
- 171
4
votes
1
answer
265
views
Can capital still be paid its marginal product in the absence of a homogeneous capital stock?
Thomas Piketty's best-selling book on inequality, "Capital in the Twenty-First Century" has attracted a lot of criticism on the right for its data analysis. Less well-known, however, is the criticism ...
3
votes
2
answers
645
views
If assets = liabilities + equity, what do we mean by overcapitalization?
Overcapitalization doesn't seem to have a clear-cut definition.
For some it seems to deal with the ratio of current output (Y) over optimal output (Y*). A company would then be overcapitalized if Y &...
- 131
2
votes
2
answers
677
views
How do we explain the difference in average leverage between banks and non-financial firms?
I've been reading a little about the capital structure of banks. For example, in this working paper, "Financing as a Supply Chain: The Capital Structure of Banks and Borrowers" by Gornall ...
- 9,385