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Kapitel 1 (Subject) / Corporate Finance 1 (Lesson)
- Market Efficiency A market is informationally efficient if prices reflect all available, price-relevant information (see, e.g., Fama, 1970, 1991).
- Weak-form efficiency all historical price information is entirely incorporated in the current price of the asset.
- Semi strong-form efficiency all publicly available information is entirely incorporated in the current price.
- Strong-form efficiency all publicly and privately available information is entirely incorporated in the current price
- Markets aggregate information Different traders hold different information. No single trader has all information. Prices aggregate the information: they (may) contain more information than any individual trader has (“wisdom of crowds”).
- Equity Value (Formel) Enterprise Value – Net Debt – Minorities
- Net Debt Includes all short-term and long-term interest bearing debt finance net of cash and marketable securities. Includes bank loans, bonds, capitalized leases, accruals for pensions… If significant changes in debt have occurred it may be better to use forecasted (or an average of historical and forecasted) net debt. It can be reasonable to use the average net debt for a cyclical business allowing for seasonal variations.
- Market capitalization, Price per share, Total earnings, Expected ROE, P/E ratio, MTB ratio, Debt-Equity ratio Market capitalization = EV - net debtPrice per share = market cap/shares outstandingTotal earnings = EPS * shares outstandingExpected ROE = earnings/book value of equityP/E ratio = share price/EPSMTB ratio = market cap/book value of equityDebt-Equity ratio = debt/market cap
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