悉尼大学资本市场与公司财务课件Lecture1.ppt

Introduction Is this subject relevant to me? This course will underpin any finance course you do in the future Is the course difficult to pass? With sufficient study, no Where can I get help? Your lecturer or another lecturer (consultation) or PASS program (see course outline) Will this course make me a millionaire? Yes…I personally guarantee it!* *Reading this statement voids all guarantees made. Fisher Separation Theorem (cont) An indifference curve shows all combinations of consumption now and later that give equal levels of satisfaction – the investor is indifferent between them Fisher Separation Theorem (cont) The higher the indifference curve, the more consumption both now and later, and therefore the greater the level of satisfaction, or utility Fisher’s Separation Theorem (cont) A capital market allows individuals to trade off between consumption and consumption later by borrowing and lending Fisher’s Separation Theorem (cont) The range of investment opportunities available to the firm can be represented by the Production Possibilities Frontier (PPF) Fisher’s Separation Theorem (cont) Firms have investment opportunities that, initially, give returns higher than those available to the individual investor in the capital market Fisher’s Separation Theorem (cont) Shareholders can then borrow or lend in the capital market to satisfy their individual consumption preferences $ later $ now Optimal consumption for shareholder B A B Fisher’s Separation Theorem (cont) The decision rule provided by Fisher’s Theorem is that management’s role is to maximise the present value of the firm’s investments in productive assets The firm should invest in all projects that have a return equal to or higher than the market rate of interest Management does not need to take into account the consumption preferences of the firm’s owners Thus the firms decisions are separate from the owners preferences, hence the name The rate of return on an asset can be defined as the gain from