Finance

horizontal

vertical

straight

conglomerate

yield to maturity

duration

volatility

term structure

Borrowing is not a good idea in this case

No difference who (firm or shareholders) borrows

It is better that the firm borrows

It is better that the shareholders borrow

internal rate of return

capital saving

opportunity cost

opportunity saving

–$20

$0

$1

$20

0

1

positive

negative

zero NPV projects have been funded

positive NPV projects have been funded

projects with IRR equal to risk-free interest rate have been funded

projects with IRR greater than risk-free interest rate have been funded

yield to maturity

duration

volatility

term structure

levered equity

unlevered equity

both levered and unlevered

bond equity

no

all

marginal

only a few