8 pillars of finance
DESCRIPTION
everything there is to know about finance in 8 easy slides!TRANSCRIPT
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8 Pillars of Finance
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I. The Past does NOT matter
Only the Future has Meaning. Ignore book value…
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II. Money has time value
Discount future money using a discount/interest rate
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III. Return is proportional to risk
Capital Asset Pricing Model
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IV. It doesn’t matter how you slice the cake…
Capital Structure, Dividend Policy don’t matter
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V. There is no point in doing what investors can do themselves..
Corporate diversification has no value to the market
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VI. You can’t make money on what everybody knows..
Markets are efficient
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VII. Insiders know more than outsiders
Dividend policy, capital structure as signals
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If you thought…
In your backyard
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Raise funds by..
– Internal funds– Rights issue– Debt issue– New equity as a last resort!
– What will be the result of a new issue of equity ?
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PILLAR 8
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NOBODY KNOWS ANYTHING.. ‘EXPERTS’ LEAST OF ALL!