Important factors for expectation theory, Finance Basics

Assignment Help:

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.

 


Related Discussions:- Important factors for expectation theory

Information signaling effect theory, Information Signaling Effect Theory ...

Information Signaling Effect Theory Advanced via Stephen Ross in year 1977, He argued such in an inefficient market; management can utilize dividend policy to signal significa

Component ratings under the camel rating system, Question: (a) Describe...

Question: (a) Describe the process for assigning composite and component ratings under the CAMEL rating system. (b) The IMF has developed some indicators to identify early

Tax differential theory, Tax Differential Theory Advanced via Lichtenb...

Tax Differential Theory Advanced via Lichtenberger and Ramaswamy in 1979.They argued that tax rate on dividends is higher quite than tax rate on capital gains. Thus, a firm th

Functions of the stock exchange, Functions of the Stock Exchange The e...

Functions of the Stock Exchange The essential function of a stock exchange is the raising of funds for investment in long-term assets. Whereas this basic function is very sign

Working Capital, AsStudents will analyze and synthesize the financial repor...

AsStudents will analyze and synthesize the financial reports of an organization of their choice and present their findings in a PowerPoint presentation (with completed Notes sectio

Government budget deficit, Government Budget Deficit If the Government...

Government Budget Deficit If the Government spends much more than it gets in from tax revenue, it runs a budget deficit. This deficit should be covered or financed either via

Commercial banks - banking institutions, Commercial Banks - Banking Institu...

Commercial Banks - Banking Institutions These are financial institutions such accept deposits of money from the universal public, safeguard the deposits and create them availa

Source of finance for the sole proprietor, Source of Finance for the Sole P...

Source of Finance for the Sole Proprietor Some sources of capital---Discuss a) Savings b) Assistance from friends or relatives c) Proceeds from sale of assets d) Ba

Objective to transfers of financial assets, Access the relevant authoritati...

Access the relevant authoritative literature on accounting for the transfer of financial assets. What conditions must be met for a transfer of receivables to be accounted for as a

Fixed income securities, Fixed income security can be defined as the ...

Fixed income security can be defined as the financial obligation of an entity (known as the issuer), which promises to pay a specified amount of money on a pre-sp

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd