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Topic 11-14 - Market Efficiency, Capital Structure Theories, Long Sources of Finan
Topic 11-14 - Market Efficiency, Capital Structure Theories, Long Sources of Finan
Course Instructor:
Dr. Wasim Abbas Shaheen
Lecture Outline
O Topic 11: Market Efficiency and Three Forms
O Topic 12: Capital Structure Theories,
O Topic 13: Long Term Sources of Finance –
Leasing
O Topic 14: Corporate Restructuring &
Takeovers
2
Topic 11: Market Efficiency and its Three Forms
4
Three Forms
5
Topic 12: Capital Structure and it Theories
DSE
O If the goal of the firm’s management is to make the firm
as valuable as possible, then the firm should pick the
debt-equity ratio that makes the pie as big as possible.
6
Stockholder Interests
7
Capital Structure Theories
9
Topic 13: Long Term Sources of
Finance – Leasing
O Lease is a contract between owner of an asset
(lessor) and the user of the asset (lessee) under
which the lessor gives the right to the lessee to use
the asset for agreed period of time and
consideration, called lease rental.
O Leasing helps start-ups, small businesses and
growing businesses to further capital investment.
O The cost of buying new equipment to meet the
changing and growing business needs can be difficult
for most small businesses.
O Leasing is infrastructure-friendly and can contribute
to a country’s infrastructure growth.
10
Types of Lease Financing
O Operating Lease:
O Operating lease is a lease where the risk and
the return stay with the lessor i.e rent a car or
building.
O Financing Lease:
O A financial lease is a lease where the risk and
the return get transferred to the lessee.
car/house financing.
11
Topic 14: Corporate Restructuring & Takeovers
(Mergers and other forms of business)
12
Corporate Restructuring Types
1. Sell – offs
2. Spin – offs
3. Liquidation
4. Going Private
O Leverage Buyouts
13