FIN 401 - Modigliani-Miller (M&M) Proposition 1 and 2 (no tax)

FIN 401 - Modigliani-Miller (M&M) Proposition 1 and 2 (no tax) - Part 3

Рет қаралды 127,428

AllThingsMathematics

6 жыл бұрын

www.FIN401.ca

Пікірлер: 78

@rickydinh9660 5 жыл бұрын

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@titanliu684 4 жыл бұрын

agree

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TOTALLY AGREE!!!

@fabioemanuelfarago2683 4 ай бұрын

because the professor doesnt really understand what he is teaching

@Skyhuller 5 жыл бұрын

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@samuelokereke2294 4 жыл бұрын

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@WhiteDervish 5 жыл бұрын

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@the_growth_mindset. 4 жыл бұрын

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@StyleWise101 3 жыл бұрын

My God! I finally get it, why can't professors be this clear!

@antoinegleize8743 6 жыл бұрын

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@herbinorth5570 6 жыл бұрын

You break it down very nicely and very easy to digest. Thank ya.

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@kasimirheeren2615 4 жыл бұрын

I am german and was just searching for a good explanation video but only tutorials in english were popping up. This just breaks down everything so well. I mean you can build up from here when you start to understand what its really about. But I don't get why in my class they are trying to explain it as complicated as possible... In the end you have 400 pages of theory and 99% of students that won't remember a thing. Just thank you!

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@alejandrouribe3574 6 жыл бұрын

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@TraTranCaoBungPhe 5 жыл бұрын

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@wss1916 2 жыл бұрын

Thank you, you makes M&M a lot more easy and fun to study. Thank you very much🙏🙏💪💪💪

@rishitraj2529 6 жыл бұрын

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@youssefsamernarouz8608 2 жыл бұрын

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@hugocheung6369 6 жыл бұрын

awesome and clear explantation. Thank you !!

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@ABNER518 4 жыл бұрын

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@MissFaizaNaeem 6 жыл бұрын

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@anzhelakayryakova4598 6 жыл бұрын

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@SniffyMon 3 жыл бұрын

Thank you so much my friend.

@huai-jinzhang6099 5 жыл бұрын

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@savealot2 4 жыл бұрын

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@annienguyen1885 5 жыл бұрын

Great explanations! Very helpful! Clear and concise - thank you. Ps totally hot too (that always helps with concentration levels) 😜

@hanyeoreumk 4 жыл бұрын

Really helpful cheers!

@m.preacher2829 6 жыл бұрын

i have a question. Why cost of debt is not equal to the WACC if we only finance by debt according to the diagram (WACC is higher than rd)?

@tingyuliu3943 3 жыл бұрын

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@guswhd1128 5 жыл бұрын

wow your video saved my life. you're wayyyyyy better than my professor. thank you sooooo much

@AllThingsMathematics 5 жыл бұрын

Thank you :) Glad the vids helped!!

@lausgmtz 6 жыл бұрын

Gracias :D tha's very clear

@stefanochiappori3154 5 жыл бұрын

I'd like to know how going to the formula of the return on assets to the formula return on equity.. I don't understand

@nkule2493 4 жыл бұрын

i also got a bit lost there

@lordmini76 6 жыл бұрын

thanks!

@michaelsolovyev5140 Ай бұрын

Is it should be r0, but not ra? (Cost of capital financed only with equity - r0)

@vinitkumarkshatri6676 3 жыл бұрын

I am not sure but is ROE and cost of equity the same? i googled it and it says they ain't same. Please help!

@nkule2493 4 жыл бұрын

Kindly explain the RoA = WACC again? I got lost there

@hannahreading3536 4 жыл бұрын

so good

@carolwq 2 жыл бұрын

At 2:05, shouldn’t the cost of equity also increase as equity risk increases? Then the present value of shares will decrease as a result of the increased cost of equity as a discount rate?

@cyc8981 6 жыл бұрын

7:15 anyone know why the return on debt (Rd) is at constant level?

@sebastiannordstern9103 5 жыл бұрын

I think thats because the interest of the debt stays constant regardless the amount of debt

@panostolis9147 5 жыл бұрын

The Rd cannot be constant in a real-world environment. The more you add to financial leverage the bigger the default risk becomes and hence the bondholder will demand a premium for this default risk.

@cedricvogt2576 4 жыл бұрын

@@panostolis9147 Yes, but here we are dealing with a theory world, where there are no costs associated with bankruptcy. In my opinion this means that there won't be a premium demanded by bondholders for the increase in debt - or in other words: Rd does not increase. Let me know your thoughts on this and if I got it correctly. Thanks a lot.

@SuryoHady 3 жыл бұрын

I read the paper, there is the third proposition... why everybody doesn't talking about the third proposition ?

@reservoirdograyh4n 3 жыл бұрын

Why is cost of equity being referred to as return on equity (Return/cost of equity)? When theyre clearly not the same thing. ROE is being referred to as if its a return on equity TO THE SHAREHOLDER. Isnt the ROE a return to the firm? Like, how effectively they use their equity to generate returns?

@lolita55ful Жыл бұрын

yeah thats what I dont get

@danielfraga 5 жыл бұрын

top!!!

@jessicazhou8076 5 жыл бұрын

I am confused about debt and equity in this video. As debt and equity are two different financing methods. So what's to do with debt when equity increase risk ?

@AmanKhanTM 5 жыл бұрын

I think the meaning is more along the lines of the risk when you invest in the firm increases when your leverage increases. So for people investing in an unlevered firm, equity has no risk, while for levered, equity, meaning investing in the company is risky. People can't invest in debt of the firm, so risky equity means risky investment in firm.

@ivettjiron5942 3 жыл бұрын

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@AllThingsMathematics 3 жыл бұрын

thank you :) feel free to shoot me an email at patrick@allthingsmathematics.com

@ajiboyea2 2 жыл бұрын

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@AllThingsMathematics 2 жыл бұрын

they're on my site! Link in description box!

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@@AllThingsMathematics Seen. Thank you

@mat6685 5 жыл бұрын

What is Dustin Porier doing giving finance courses :-)

@peazeful-u3i 4 жыл бұрын

lol Damn ! gotcha

@lantrinhhuong9685 5 ай бұрын

but why rD is constant? I still don’t get this point can anyone help

@ramakasetty5337 5 жыл бұрын

Can u pls derive the formula

@deresse25 2 жыл бұрын

To the point

@forambarot2317 4 жыл бұрын

why is the equity more risky in a leveraged firm?

@raoufghorbel6092 Жыл бұрын

A Qualitative answer can be beacause the more leveraged a firm is, the more junior the payment to equity holders is going to be ( they will get there money AFTER the bank is paid), and the more leveraged the firm, the higher the risk for equity holders to get paid ( risk of default or bankruptcy which is accounted for in the MM world) . that risk should be compensated in the cost of capital. I know that my reply is late, but I thought that it would be useful for others.

@najmakhalil5257 3 жыл бұрын

hi, great video but just want to point out that the return on debt would not remain constant as the company takes on more leverage. infact r_D would also increase because as the amount of debt increases there is a higher chance that the company will default. so as the company takes on more leverage, BOTH return on equity and debt increase but WACC will remain constant because it's a weighted average.