Financial Fed Decision: Interest rates cut by a quarter point |
- Fed Decision: Interest rates cut by a quarter point
- Top 15 Largest US Companies by Revenue 1954-2018
- Aramco Tells IPO Bankers It Made $68 Billion in 9 Months
- Optimal Capital Structure - Doubt
- Fiat-Peugeot Talks Signal Growing Pressure on Car Industry
| Fed Decision: Interest rates cut by a quarter point Posted: 30 Oct 2019 11:08 AM PDT
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| Top 15 Largest US Companies by Revenue 1954-2018 Posted: 31 Oct 2019 06:31 AM PDT | ||
| Aramco Tells IPO Bankers It Made $68 Billion in 9 Months Posted: 30 Oct 2019 04:43 PM PDT
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| Optimal Capital Structure - Doubt Posted: 31 Oct 2019 07:24 AM PDT Hi guys, I have a doubt. Basically I understand the theory, it is not complex. However, I do not know how to calculate or even the theory behind the increased risk when raising more and more debt. "An optimal capital structure is the objectively best mix of debt, preferred stock, and common stock that maximizes a company's market value while minimizing its cost of capital. In theory, debt financing offers the lowest cost of capital due to its tax deductibility. However, too much debt increases the financial risk to shareholders and the return on equity that they require. Thus, companies have to find the optimal point at which the marginal benefit of debt equals the marginal cost." When raising debt it raises the risk and thus raising the required return on equity by the shareholders. However, how do we know how much risk raising debt increases? Sorry if I did not explain myself well. If you have doubts let me know [link] [comments]  | ||
| Fiat-Peugeot Talks Signal Growing Pressure on Car Industry Posted: 30 Oct 2019 04:30 PM PDT
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