Stock markets, investments and corporate behavior : a conceptual framework of understanding / Michael Dempsey, RMIT University, Melbourne, Australia.

Format:

Book

Author/Creator:

Dempsey, Michael (Michael J.), author.

Language:

English

Subjects (All):

Corporations--Finance--Mathematical models.

Corporations.

Capital assets pricing model.

Stocks--Prices.

Stocks.

Corporations--Valuation.

Capital market.

Physical Description:

1 online resource (332 p.)

Place of Publication:

London : Imperial College Press ; Hackensack, New Jersey : Distributed by World Scientific Publishing Company Pte. Limited, [2016]

Language Note:

English

Summary:

"Stock Markets, Investments and Corporate Behavior examines the nature of stock market growth and decline, the function of financial markets, and their implications for commercial companies. Traditionally, finance academics have attempted to understand financial markets and commercial companies as physicists approach their subject matter: with a set of laws in mind that govern the field. But finance is not physics. The academic's approach falsely assumes that financial markets can be understood as systems within which self-interested maximizers behave in logical ways that are coordinated by the invisible hand of the price mechanism. This book demonstrates that finance is more appropriately understood as a field in which investors and finance managers may or may not use rational calculations as the basis of their decision making. This book opens with an effective dismantling of the traditional mathematical approach used to understand and describe markets and corporate financial behavior. In its place, the mathematics of growth and decline is developed anew, while holding to the realization that the decisions of organizations rely on the choices of real people with limited information available to them. The book will appeal to all students who wish to reappraise their knowledge of finance in a thoughtful manner. Specifically, this book is designed to appeal to anyone who wishes to refine their understanding of the nature of stock markets and financial growth, optimal portfolio allocation, option pricing, asset valuation, corporate financial behavior, and what it means to be ethical in our financial institutions."-- Provided by publisher.

Contents:

Contents; A Short Bio for the Author (Official Version); Unofficial Bio; Prologue; Chapter 1. Introduction: Stock Markets, Investments and Corporate Financial Decision Making; Part A- Foundations of Stock Pricing: A Critical Assessment; Chapter 2. The Capital Asset Pricing Model; 2.1. Introduction; 2.2. Background to the CAPM; 2.3. A Test for the CAPM; 2.4. The Black Model; 2.5. A Test of the Irrelevancy of Beta; 2.6. Time for Reflection: What HaveWe Learned?; Chapter 3. The Fama and French Three-Factor Model; 3.1. Introduction; 3.2. The Fama and French Three-Factor Model

3.3. Critique of the Fama and French Three-Factor Model3.4. Time for Reflection: What HaveWe Learned?; Chapter 4. Beyond the Fama and French Three-Factor Model; 4.1. Introduction; 4.2. Asset Pricing Research; 4.3. Asset Pricing and Data Mining; 4.4. Implications of Abandoning the CAPM; 4.5. Time for Reflection: What HaveWe Learned?; Part B - Foundations of Corporate Financial Activity: A Critical Assessment; Chapter 5. The Modigliani and Miller Propositions and the Foundations of Corporate Finance; 5.1. Introduction; 5.2. Corporate Financial Management prior to MM

5.3. Corporate Finance and the Paradigm of the MM Propositions5.4. A Critique of the MM Propositions; 5.5. Recent Developments in Corporate Finance; 5.6. Time for Reflection: What HaveWe Learned?; Part C- Stock Markets and Investment Choices: Growth, Asset Pricing and Portfolio Construction; Chapter 6. Mathematics of Growth; 6.1. Introduction; 6.2. The Important Power Laws; 6.3. Discrete Returns, Compounding, and Discounting; 6.4. Continuously Compounding Growth Rates; 6.5. Application of Logarithms; 6.6. The Normal Distribution; 6.7. The Normal Distribution and Asset Pricing

6.8. Rates of Change between Variables and their Implied Direct Relation: The Calculus6.9. The Calculus of the Normal Probability Function; 6.10. Portfolio Formation: Expected Returns, Standard Deviations (Variance), Covariance, Beta, and Correlation Coefficients; 6.10.1. Expected return; 6.10.2. Variance and standard deviation; 6.10.3. Covariance; 6.10.4. Variance of portfolio returns; 6.10.5. An example with normal distribution tables; 6.10.6. Beta; 6.10.7. Correlation; 6.11. The Central Limit Theorem; 6.12. The Binomial Representation of Normally Distributed Exponential Growth Rates

6.13. Time to Reflect: What HaveWe Learned?Chapter 7. The Statistical Growth of Asset Portfolios; 7.1. Introduction; 7.2. Normally Distributed Growth Rates as a Foundation for Asset Price Formation; 7.3. The Mathematics of Normally Distributed Growth Rates; 7.4. The Outcome of Normally Distributed Growth Rates; 7.5. Normally Distributed Growth Rates and the Small Firm Size Effect in the FF-3F Model; 7.6. Time for Reflection: What HaveWe Learned?; 7.6. Time for Reflection: What HaveWe Learned?; Chapter 8. The Fundamentals of Growth, Asset Pricing, and Portfolio Allocation; 8.1. Introduction

8.2. Portfolio Formation with One Risky Asset and One Risk-Free Asset

Notes:

Description based upon print version of record.

Includes bibliographical references and index.

Description based on print version record.

ISBN:

1-78326-700-3