efficient markets and behavioral finance

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1、confirmingpagesPART4CHAPTER"""""13FINANCINGDECISIONSANDMARKETEFFICIENCYEfficientMarketsandBehavioralFinance!Uptothispointwehaveconcentratedalmostbyrepurchasingonesecurityandissuinganother.Inthatexclusivelyontheleft-handsideofthebalancesheet—casethereisnoneedtoassociateaparticularinvestmen

2、tthefirm’scapitalinvestmentdecision.Nowwemovetotheprojectwithaparticularsourceofcash.Thefirmcanthink,right-handsideandtotheproblemsinvolvedinfinancingfirst,aboutwhichprojectstoacceptand,second,aboutthecapitalinvestments.Toputitcrudely,you’velearnedhowtheyshouldbefinanced.howtospendmoney,n

3、owlearnhowtoraiseit.SometimesdecisionsaboutcapitalstructureOfcoursewehaven’ttotallyignoredfinancingindependonprojectchoiceorviceversa,andinthoseearlierchapters.Weintroducedtheweighted-averagecasestheinvestmentandfinancingdecisionshavetocostofcapital,forexample.Butinmostplaceswehavebeconsi

4、deredjointly.However,wedeferdiscussionoflookedpastfinancingissuesandusedestimatesofthesuchinteractionsoffinancingandinvestmentdecisionsopportunitycostofcapitaltodiscountfuturecashflows.untilChapter19.Wedidn’taskhowthecostofcapitalmightbeaffectedWestartthischapterbycontrastinginvestmentand

5、byfinancing.financingdecisions.TheobjectiveineachcaseistheNowweareturningtheproblemaround.Wetakesame—tomaximizeNPV.However,itmaybehardertothefirm’spresentportfolioofrealassetsanditsfuturefindpositive-NPVfinancingopportunities.Thereasonitinvestmentstrategyasgiven,andthenwedetermineisdiffic

6、ulttoaddvaluebycleverfinancingdecisionsisthebestfinancingstrategy.Forexample,thatcapitalmarketsareusuallyefficient.Bythiswemeanthatfiercecompetitionbetweeninvestorseliminatesprofit•Shouldthefirmreinvestmostofitsearningsintheopportunitiesandcausesdebtandequityissuestobefairlybusiness,ordis

7、tributethecashtoshareholders?priced.Ifyouthinkthatsoundslikeasweepingstatement,•Ifthefirmneedsmoremoney,shoulditissuemoreyouareright.Thatiswhywehavedevotedthischaptertostockorshoulditborrow?explainingandevaluatingtheefficient-markethypothesis.•Shoulditborrowshortter