8 pillars of finance

12
8 Pillars of Finance

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everything there is to know about finance in 8 easy slides!

Transcript of 8 pillars of finance

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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!