Important factors for expectation theory, Finance Basics

Important Factors for Expectation Theory

The following circumstances are essential for the expectation theory to hold.

i) Ideal capital markets exists where there are many sellers and buyers of security along with none having a important influence on the interest rates.

ii) Investors have homogeneous expectations for future interest rates and returns upon all investments.

iii) Investors are rational wealth maximizes

iv) Bankruptcy of firms because of use of borrowing is unlikely.

 

Posted Date: 1/30/2013 2:59:44 AM | Location : United States







Related Discussions:- Important factors for expectation theory, Assignment Help, Ask Question on Important factors for expectation theory, Get Answer, Expert's Help, Important factors for expectation theory Discussions

Write discussion on Important factors for expectation theory
Your posts are moderated
Related Questions
Solutions - Shareholders and Management Conflict Conflicts between management and shareholders may be resolved as follows like: 1. Pegging or attaching managerial compens

1. Describe the similarities and differences in between an ordinary annuity, an annuity due, and perpetuity.  Provide a methodical answer, including examples to demonstrate your po

Charleston Industrial revised its dividend policy and decided that it wants to maintain a retained earnings account of $1 million. The company''s retained earnings account at the e

Advantages of Investment in Shares 1. Income in form of dividends When you contain shares of a company then you become a part-owner of such company and hence you will be

Klose Outfitters Inc. believes that its optimal capital structure having of 60% common equity and 40% debt, and its tax rate is 40%. Klose have raise additional capital to fund its

Partnership Definition -Partnership may be defined as a relationship between persons carrying on a business in common with a view of profits. In partnership business, two or mo

Financial Planning Project Instructions: You will serve as a financial advisor for your client to develop a financial plan. You can compile all the worksheets introduced in eac

Trading Mechanism 1. An investor approaches brokers who obtain his bid or prefer to the trading floor. 2. At the trading floor, the selling and buying brokers meet and sea

Define the direct finance and indirect finance in markets. In direct finance, borrower-spenders borrow funds directly by lenders into the financial markets through selling them

Financial analysis: Financial analysis (also defined to as financial statement analysis or accounting analysis or Analysis of finance) defines to an assessment of the viabilit