Fundamentals of Corporate Finance Third edition Chapter 9 Introduction to Brealey Myers Marcus Risk, Return, and the ndamentals of Corporate Finan Opportunity Cost of Capital Brealey Myers Marcus slides by Matthew Will IrwinMcGraw-Hill CThe McGraw-Hill Companies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 9- 1 Irwin/McGraw-Hill Chapter 9 Fundamentals of Corporate Finance Third Edition Introduction to Risk, Return, and the Opportunity Cost of Capital Brealey Myers Marcus slides by Matthew Will Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc.,2001
9-2 Topics Covered RAtes of return 373 Years of Capital Market Histor → Measuring risk RIsk diversification THinking about risk Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 9- 2 Irwin/McGraw-Hill Topics Covered Rates of Return 73 Years of Capital Market History Measuring Risk Risk & Diversification Thinking About Risk
9-3 Rates of return Percentage Return Capital gain Dividend Initial Share Price Percentage return 28+125 74 395or39.5 Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 9- 3 Irwin/McGraw-Hill Rates of Return = .395 or 39.5% Percentage Return = 7 4 2 8+1.25 Percentage Return = Capital Gain + Dividend Initial Share Price
9-4 Rates of return Dividend yield Dividend Initial share Price Capital Gain Yield Capital gain Initial share Price Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 9- 4 Irwin/McGraw-Hill Rates of Return Dividend Yield = Dividend Initial Share Price Capital Gain Yield = Capital Gain Initial Share Price
9-5 Rates of return Dividend Yield 1.25 74 =.017or01.7% 28 Capital gain Yield 74 378or37.8 Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 9- 5 Irwin/McGraw-Hill Rates of Return .017 or 01.7% 74 1.25 Dividend Yield = = .378 or 37.8% 74 28 Capital Gain Yield = =