I’m taking this as my main lecture room , I’ve downloaded all the topics I’ve seen, please keep up the good work, we’re here to watch your work. Thanks again. For now , no more lectures, we live here .
I am german and was just searching for a good explanation video but only tutorials in english were popping up. This just breaks down everything so well. I mean you can build up from here when you start to understand what its really about. But I don't get why in my class they are trying to explain it as complicated as possible... In the end you have 400 pages of theory and 99% of students that won't remember a thing. Just thank you!
All classes turn to Zoom and my prof just keeps reading out from the ppt slides for a 3-hour-lecture, we don't understand any sxxt! Your simple and useful videos definitely save us and save so much our time! Thanks Patrick!
Thanks a lot. Thanks for saving my life with finance haha. Your tutoring helps me a lot in understanding clearly basic concepts in finance. Hopefully you will make more videos relating to finance.
Why is cost of equity being referred to as return on equity (Return/cost of equity)? When theyre clearly not the same thing. ROE is being referred to as if its a return on equity TO THE SHAREHOLDER. Isnt the ROE a return to the firm? Like, how effectively they use their equity to generate returns?
Amazing teaching from London ypu should be paying well for what you offering to all of us thanks so much I have my exam tomorrow how I can get in contact with you for private lesson ? Online
At 2:05, shouldn’t the cost of equity also increase as equity risk increases? Then the present value of shares will decrease as a result of the increased cost of equity as a discount rate?
The Rd cannot be constant in a real-world environment. The more you add to financial leverage the bigger the default risk becomes and hence the bondholder will demand a premium for this default risk.
@@panostolis9147 Yes, but here we are dealing with a theory world, where there are no costs associated with bankruptcy. In my opinion this means that there won't be a premium demanded by bondholders for the increase in debt - or in other words: Rd does not increase. Let me know your thoughts on this and if I got it correctly. Thanks a lot.
I am confused about debt and equity in this video. As debt and equity are two different financing methods. So what's to do with debt when equity increase risk ?
I think the meaning is more along the lines of the risk when you invest in the firm increases when your leverage increases. So for people investing in an unlevered firm, equity has no risk, while for levered, equity, meaning investing in the company is risky. People can't invest in debt of the firm, so risky equity means risky investment in firm.
A Qualitative answer can be beacause the more leveraged a firm is, the more junior the payment to equity holders is going to be ( they will get there money AFTER the bank is paid), and the more leveraged the firm, the higher the risk for equity holders to get paid ( risk of default or bankruptcy which is accounted for in the MM world) . that risk should be compensated in the cost of capital. I know that my reply is late, but I thought that it would be useful for others.
hi, great video but just want to point out that the return on debt would not remain constant as the company takes on more leverage. infact r_D would also increase because as the amount of debt increases there is a higher chance that the company will default. so as the company takes on more leverage, BOTH return on equity and debt increase but WACC will remain constant because it's a weighted average.
one video of yours is much more valuable than the whole 2-hour lecture from my professor. Thank you so much!
I was thinking exactly the same
agree
TOTALLY AGREE!!!
because the professor doesnt really understand what he is teaching
I am loving. I have no words. It is simple and clear. I sometimes spend hours reading and going to classes and I do not understand a thing!
My God! I finally get it, why can't professors be this clear!
I’m taking this as my main lecture room , I’ve downloaded all the topics I’ve seen, please keep up the good work, we’re here to watch your work. Thanks again. For now , no more lectures, we live here .
these videos are the best, quick to the point, explains all the connections, perfect!
This is the best possible way to explain. So organized, thank you so much!
If only I had found this channel sooner. Would have saved so much time.
I am german and was just searching for a good explanation video but only tutorials in english were popping up. This just breaks down everything so well. I mean you can build up from here when you start to understand what its really about. But I don't get why in my class they are trying to explain it as complicated as possible... In the end you have 400 pages of theory and 99% of students that won't remember a thing. Just thank you!
All classes turn to Zoom and my prof just keeps reading out from the ppt slides for a 3-hour-lecture, we don't understand any sxxt! Your simple and useful videos definitely save us and save so much our time! Thanks Patrick!
He is so great at explaining. Keeps it simple. Keep it up Bro!
Thank you, you makes M&M a lot more easy and fun to study. Thank you very much🙏🙏💪💪💪
Thank you so much. Your video is very easy to understand and worth watching
You break it down very nicely and very easy to digest. Thank ya.
This guy is such an awesome teacher
Super useful in the whole series !!!!!!!
Thank you sooooo much.. This video help me a lot.... My exams are coming and I totally understanded what is MM. THANKS 😊😊😊😊
Hello Patrick, your videos on Corporate Finance are very useful and full of pedagogy. Well done and Thank You !!
Thank you so much!!! Your videos are so helpful!
God bless you and the stomach that carried you
dude i love you so fucking much, your videos >>>>>>>>>>>>>>>>>>>>>>>> university courses
Thank you so much my friend.
Graciass!!! Saludo de un autodidacta peruano :)
wow your video saved my life. you're wayyyyyy better than my professor. thank you sooooo much
Thank you :) Glad the vids helped!!
Thanks a lot. Thanks for saving my life with finance haha. Your tutoring helps me a lot in understanding clearly basic concepts in finance. Hopefully you will make more videos relating to finance.
Awesome videos! Your explanations help a ton
This guy is a genious!
Thank you so much !!! You are a great teacher 🙏💕
awesome and clear explantation. Thank you !!
God bless you bro this helped me so much
Nice lecture!!!! thanks a looooooot!!!!
omg wonderful!!!!!!!!!!
Thank you! It was really useful.
Really helpful cheers!
Thank youuu sooo muchh. you safe my life
You're amazing!!!! Thank youuuuu
Confused about one thing. What would be the impact on firm valuation if they couldn't do homemade leverage? Thanks.
Why is cost of equity being referred to as return on equity (Return/cost of equity)? When theyre clearly not the same thing. ROE is being referred to as if its a return on equity TO THE SHAREHOLDER. Isnt the ROE a return to the firm? Like, how effectively they use their equity to generate returns?
yeah thats what I dont get
Your lectures are so rich, can you please create a playlist for all these finance cost. I can't find the lectures in your play list
they're on my site! Link in description box!
@@AllThingsMathematics Seen. Thank you
I'd like to know how going to the formula of the return on assets to the formula return on equity.. I don't understand
i also got a bit lost there
Great explanations! Very helpful! Clear and concise - thank you.
Ps totally hot too (that always helps with concentration levels) 😜
Amazing teaching from London ypu should be paying well for what you offering to all of us thanks so much I have my exam tomorrow how I can get in contact with you for private lesson ? Online
thank you :) feel free to shoot me an email at patrick@allthingsmathematics.com
At 2:05, shouldn’t the cost of equity also increase as equity risk increases? Then the present value of shares will decrease as a result of the increased cost of equity as a discount rate?
so good
I read the paper, there is the third proposition... why everybody doesn't talking about the third proposition ?
Is it should be r0, but not ra? (Cost of capital financed only with equity - r0)
7:15 anyone know why the return on debt (Rd) is at constant level?
I think thats because the interest of the debt stays constant regardless the amount of debt
The Rd cannot be constant in a real-world environment. The more you add to financial leverage the bigger the default risk becomes and hence the bondholder will demand a premium for this default risk.
@@panostolis9147 Yes, but here we are dealing with a theory world, where there are no costs associated with bankruptcy. In my opinion this means that there won't be a premium demanded by bondholders for the increase in debt - or in other words: Rd does not increase. Let me know your thoughts on this and if I got it correctly. Thanks a lot.
What is Dustin Porier doing giving finance courses :-)
lol Damn ! gotcha
top!!!
Gracias :D tha's very clear
i have a question. Why cost of debt is not equal to the WACC if we only finance by debt according to the diagram (WACC is higher than rd)?
Kindly explain the RoA = WACC again? I got lost there
thanks!
but why rD is constant? I still don’t get this point can anyone help
To the point
I am not sure but is ROE and cost of equity the same? i googled it and it says they ain't same. Please help!
I am confused about debt and equity in this video. As debt and equity are two different financing methods. So what's to do with debt when equity increase risk ?
I think the meaning is more along the lines of the risk when you invest in the firm increases when your leverage increases.
So for people investing in an unlevered firm, equity has no risk, while for levered, equity, meaning investing in the company is risky.
People can't invest in debt of the firm, so risky equity means risky investment in firm.
why is the equity more risky in a leveraged firm?
A Qualitative answer can be beacause the more leveraged a firm is, the more junior the payment to equity holders is going to be ( they will get there money AFTER the bank is paid), and the more leveraged the firm, the higher the risk for equity holders to get paid ( risk of default or bankruptcy which is accounted for in the MM world) . that risk should be compensated in the cost of capital. I know that my reply is late, but I thought that it would be useful for others.
Can u pls derive the formula
hi, great video but just want to point out that the return on debt would not remain constant as the company takes on more leverage. infact r_D would also increase because as the amount of debt increases there is a higher chance that the company will default. so as the company takes on more leverage, BOTH return on equity and debt increase but WACC will remain constant because it's a weighted average.
salut t'es mon pote on va boire un café après demain ? merci bise