Lecture Fundamentals of corporate finance - Chapter 12: Some lessons from capital market history

T12.1 Chapter Outline Chapter 12 Some Lessons from Capital Market History Chapter Organization 12.1 Returns 12.2 The Historical Record 12.3 Average Returns: The First Lesson 12.4 The Variability of Returns: The Second Lesson 12.5 Capital Market Efficiency 12.6 Summary and Conclusions CLICK MOUSE OR HIT SPACEBAR TO ADVANCE Irwin/McGraw­Hill copyright © 2002 McGraw­Hill Ryerson, Ltd. T12.2 Risk, Return, and Financial Markets “. . . Wall Street shapes Main Street. Financial markets transform factories, department stores, banking assets, film companies, machinery, soft-drink bottlers, and power lines from parts of the production process . . . into something easily convertible into money. Financial markets . . . not only make a hard asset liquid, they price that asset so as to promote its most productive use.” Peter Bernstein, in his book, Capital Ideas Irwin/McGraw­Hill copyright © 2002 McGraw­Hill Ryerson, Ltd Slide 2 T12.3 Percentage Returns (Figure 12.2) Irwin/McGraw­Hill copyright © 2002 McGraw­Hill Ryerson, Ltd Slide 3 T12.3 Percentage Returns (Figure 12.2) (concluded) Dividends paid at end of period Percentage return = + Change in market value over period Beginning market value Dividends paid at end of period 1 + Percentage return = + Market value at end of period Beginning market value Irwin/McGraw­Hill copyright © 2002 McGraw­Hill Ryerson, Ltd Slide 4 T12.4 A $1 Investment in Different Types of Portfolios: 1948-1999 1000 TSE 300 Stocks 100 Long Bonds 10 Treasury bills 1 1945 1955 1965 1975 1985 1995 Small Stocks 0.1 Year Irwin/McGraw­Hill copyright © 2002 McGraw­Hill Ryerson, Ltd Slide 5 ... - tailieumienphi.vn