金融工程學-全英文ppt38-國際金融-展示頁
2024-08-26 16:33本頁面
【正文】 WACC multiplied by financial leverage. 23 All transactions in financial markets are zero – NPV transaction activities. Proposition! 24 Implication of Mamp。M Assumption, ., in the frictionless environment, the total market value of a firm is independent of its capital structure. ? Think of the firm as a gigantic pizza, divided into quarters. If now, you cut each quarter in half into eights, the M amp。M assumptions: ? Frictionless assumptions – No ine taxes – No transaction costs – No information asymmetry – No cost to resolve interest conflicts among stakeholders ? All liabilities are riskfree 17 Notes: A mini – case: does capital structure matter? Two panies EBIT Capital structure Firm value $10 million bonds: $40 million, 8% shares: 600,000 1. A’s share price: $100 per share expected return: 10% 1 million shares $100 million B ? A 2. B’s bond: riskfree the share number is supposed share expected return: ? 18 (Riskfree) No Position Immediate Cash Flow Cash Flow in the Future Replication of A’s Stock Using B’s Stock and Bonds B’s Total Payments = B’s Net Earnings + Interest Payments = ( EBIT $ million) + $ million = EBIT Suppose price of B’s stock = $90 per share Short sell 1% A’s shares at $100 per share Buy 1% B’s shares at $90 per share Buy 1% B’s bonds +$1,000,000 ? 1% of EBIT ? $540,000 1%?( EBIT? $3,200,000 ) ? $400,000 1% ? $3,200,000 Net Cash Flow $60,000 0 Arbitrage Price of B’s stock = $100 per share 19 Mamp。 Banking — Moary Economics ? International Finance — International Economics 6 Corporate Finance Capital Market (Investments) Financial Economics Multinational Corporate Finance International Financial Market Financial Engineering 7 What is Financial Engineering? ? Generalizing: Financial Engineering involves the design, the development, and the implementation of innovative financial instruments and processes, and the formulation of creative solutions to proble
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