1 / 16

Financiering

Financiering. Jeroen E. Ligterink jeroenl@fee.uva.nl 2001. BMM 12 Topics Covered. Investment Decision vs. Financing Decision Market Efficiency Weak form efficiency Semi-strong form efficiency Strong form efficiency Lessons of Market Efficiency. Market Efficiency.

francis-conley
Download Presentation

Financiering

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Financiering Jeroen E. Ligterinkjeroenl@fee.uva.nl 2001

  2. BMM 12 Topics Covered • Investment Decision vs. Financing Decision • Market Efficiency • Weak form efficiency • Semi-strong form efficiency • Strong form efficiency • Lessons of Market Efficiency

  3. Market Efficiency Efficient Capital Markets - Financial markets in which security prices rapidly reflect all relevant information about asset values. Random Walk - Security prices change randomly, with no predictable trends or patterns.

  4. Random Walk Theory • The movement of stock prices from day to day DO NOT reflect any pattern. • Statistically speaking, the movement of stock prices is random (skewed positive over the long term).

  5. Random Walk Theory

  6. Random Walk Theory

  7. Market Efficiency Weak Form Efficiency - Market prices rapidly reflect all information contained in the history of past prices. Semi-Strong Form Efficiency - Market prices reflect all publicly available information. Strong Form Efficiency - Market prices reflect all information that could in principle be used to determine true value.

  8. Lessons of Market Efficiency • Markets have no memory • Trust market prices • There are no financial illusions • Do it yourself diversification • Seen one stock, seen them all • Reading the entrails

  9. BMM 13, Topics Covered • Common Stock • Preferred Stock • Corporate Debt • Convertible Securities • Patterns of Corporate Financing

  10. Patterns of Corporate Financing • Firms may raise funds from external sources or plow back profits rather than distribute them to shareholders. • Should a firm elect external financing, they may choose between debt or equity sources.

  11. Patterns of Corporate Financing

  12. BMM 14: Topics Covered • Venture Capital • The Initial Public Offering • The Underwriters • General Cash Offers • The Private Placement

  13. Initial Offering Initial Public Offering (IPO) - First offering of stock to the general public. Underwriter - Firm that buys an issue of securities from a company and resells it to the public. Spread - Difference between public offer price and price paid by underwriter. Prospectus - Formal summary that provides information on an issue of securities. Underpricing - Issuing securities at an offering price set below the true value of the security.

  14. General Cash Offers Seasoned Offering - Sale of securities by a firm that is already publicly traded. General Cash Offer - Sale of securities open to all investors by an already public company. Shelf Registration - A procedure that allows firms to file one registration statement for several issues of the same security. Private Placement - Sale of securities to a limited number of investors without a public offering.

  15. Rights Issue Rights Issue - Issue of securities offered only to current stockholders. Example - YRU Corp currently has 9 million shares outstanding. The market price is $15/sh. YRU decides to raise additional funds via a 1 for 3 rights offer at $12 per share. If we assume 100% subscription, what is the value of each right?

  16. Rights Issue Example - YRU Corp currently has 9 million shares outstanding. The market price is $15/sh. YRU decides to raise additional funds via a 1 for 3 rights offer at $12 per share. If we assume 100% subscription, what is the value of each right? • Current Market Value = 9 mil x $15 = $135 mil • Total Shares = 9 mil + 3 mil = 12 mil • Amount of new funds = 3 mil x $12 = $36 mil • New Share Price = (136 + 36) / 12 = $14.25/sh • Value of a Right = 15 - 14.25 = $0.75

More Related