The Capital Structure Decision and Perfect Markets, James Tompkins

This is the third lecture in the "Advanced Corporate Finance" series in which I begin to discuss the firm's capital structure decision. Does the decision on the percentage of debt or equity (or other financial securities) a firm chooses, would you expect this to impact the value of the firm? Miller and Modigliani show given some specific assumptions, that how a firm structures its capital neither affects firm value or its stock price. In other words, subject to these assumptions, the capital structure decision is unimportant. Hence to the extent that the capital structure or financing decision is important, it must be because of one or more of the assumption constraints. I explore this in the next two lectures.

[@brianmoulton6214]

Awesome videos still being watched years after original release! Thanks a lot from Amsterdam.

[@tplapla7]

You are fantastic! Thank you!

[@aprilapril5951]

Great video, thanks!!

[@JNicole8421]

Thank you from Maastricht, Netherlands!

[@deborahdujardin23]

Thank you !

[@heymifoo2635]

Thank you James. My Corporate Finance lecturer is worse than your Latin professor. You're a lifesaver.

[@understandingfinance]

+Heymi Foo :)

[@GMS919]

GREAT

[@Clifffffffffford]

Thanks !

[@Vezarici]

Hello Mister these videos (Capital structure ) Helped me a lot Thank you i have a question can you please explain what do you mean by my liminat stand or something like this

[@priyankam2449]

you should replace my professor 😭😭 thank you for your help!!

[@zvonest4]

Doesnt a grater required rate of return increases a discount reate and therefore decreases a net present value of the firm, and therefore its overall value and a stock price ?

[@understandingfinance]

I prefer not to answer questions on you tube because it robs others of the thought process as they watch the videos. I wish you were in my class because it is a great question.

[@zvonest4]

Ok i understand. Could you please send me an email [e-mail]

[@Vezarici]

it has to do with thee first assumption in perfect market ( asset investment policies are fixed...............................)

[@understandingfinance]

Hamza Zaki Hi Hamza. Delighted the videos are helpful. Anyway I am referring to a "lemonade stand". This is a business that kids will open in the summer time when they make lemonade and sell it to customers from a fixture called a "lemonade stand". If you google "lemonade stand" you can see pictures. Anyway, the point of it was to give you an example of an asset investment.

[@Vezarici]

Ohh thanks i got it. Thanks for answering