Introduction - Behavioral finance
3 important questions on Introduction - Behavioral finance
Impact van EPU on future stock prices
Firms do not adjust dividend policy
BUT investors require a higher risk premium
because higher discount rate & higher expected return
SO expected dividends are discounted at a higher rate of return
BUT investors require a higher risk premium
because higher discount rate & higher expected return
SO expected dividends are discounted at a higher rate of return
M&A what is - horizontal - vertical - conglomerate
Horizontal = two competitors combine
vertical = buyer-seller relationship
Conglomerate = no competitors, no buyer seller relationship
vertical = buyer-seller relationship
Conglomerate = no competitors, no buyer seller relationship
Why do M&A's come in waves
Because the number of overvalued companies increase during a stock market boom, this 'over' value in one larger company is then used by managers as leverage/collateral to acquire a lower valued company
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