Tuesday, October 20, 2009

Challenging Modern Portfolio Theory greenfaucet

We will be discussing this in class soon!

Challenging Modern Portfolio Theory greenfaucet:
"The costs of getting in financial stress are high, much less when a firm is teetering on the edge of insolvency. The cost of financing assets goes up dramatically when a company needs financing in bad times.

But the fair weather use of the M-M theorems is still useful, in my opinion. The cost of the combination of debt, equity and other instruments used to finance depends on the assets involved, and not the composition of the financing."

1 comment:

schubie said...

Sure, the leeches don't help all the patients, but they seem to help some patients.