CORPORATE FINANCE

Session 05

Main textbook for the course : Ross, Westerfield, Jordan

Modigliani-Miller theory of capital structure

Textbook chapter 17

Financial analysts and the Irak crisis

Why the analysts do not agree ? If they did the market would move to the point where they do not... (for oil price for instance).

The Dow Jones index over the past century :

Source : http://www.djindexes.com

• 1897 - 1950 : only "one accident" : the Great Depression

• 1950 - 1970 : steady growth (the equivalent of the french "Trente Glorieuses")

• 1970 - 1979 : "random evolution" : the era of uncertainty, following the oil shocks and the end to the dollar convertibility

• 1980 - 1999 : steady growth, after the Reaganomics

• 2000 - 2003 : agitated slowing down : the end to blind faith in the link between liberalism and prosperity ?