Corporate financial management Essay Example | Topics and Well Written Essays - 2500 words

Corporate financial management - Essay Example Investors are attracted to invest in a stock depending on the company’s dividend policy, which is defined as â€Å"the proportion of after tax earnings paid out in cash to the shareholders by a company† (lecture notes). Several theories have been formulated that seek to explain how investors are affected by dividends and the value of their equity holdings. From the point of view of the investor, unnecessary risk may be averted if it became possible to forecast the future price directions of stocks. This is the rationale behind dividend theory, that supposedly dividends have informative content that convey to investors the value of the company, and would tend to influence investor attitude towards the stock. The traditional view stated that use of debt lowers the cost of capital. With a lower cost of capital as discount rate, assuming the cash flows unchanged, then the value of the firm becomes higher. However, the problem with the traditional view is that it ignores the increased risk of gearing to equity holders, thereby increasing cost of equity (lecture notes). According to Modigliani and Miller’s trade-off theory, firms should favour the use of debt. M&M theory showed that the higher the debt capital used by the firm, the higher the value of the firm, even to the point of maximizing value at 100% debt. M&M, however, states that capital structure or gearing (the amount of debt) does not affect the weighted average cost of capital, and therefore the value of the firm. The M&M theory assumes, however, very restrictive and unrealistic assumptions, ignoring entirely the cost of debt default and bankruptcy. Allowing for cost of bankruptcy, a point is reached where the benefit of the tax deductibility of interest on the debt is offset by increase in the costs of debt and of equity as a result of the risk due to high leverage (USF, 2010). Miller and Modigliani (1961) theorized that in a perfect market, a firm’s investors

Shakespeare Hamlet Essay Example | Topics and Well Written Essays - 1000 words

Shakespeare Hamlet - Essay Example Through the characterization of Hamlet, Shakespeare is able to investigate and illustrate the nature of insanity in its various forms. In the play Hamlet, Shakespeare portrays the character of Hamlet in a way that supports both the idea that Hamlet is insane and that Hamlet is not mad. In so doing, the author explores the duality of the single human brain, whereby the person shows the due ability of being both mentally unstable and mentally stable all at the same time. This is displayed by Hamlet as being probably very divergent in nature and complex to comprehend in Shakespeare’s understanding of insanity. Readers view Hamlet as a man of reflection rather than a man of action. The notion that Hamlet is not insane is supported by the proposal that he only exhibits insanity so that he can say and behave in the manner he wants and get away with it. In the play by Shakespeare, Hamlet is able to rebuke the marriage of his mother and uncle without getting in trouble. He has for a long time snow had a sneaky suspicion that his uncle could have indeed killed his father to inherit throne and marry his mother. In fact, he calls Polonius a tedious fool and a fishmonger but he walks scot-free. By faking insanity, Hamlet is not only able to get away with whatever he utters, but he is also able to act in cruel manner towards Ophelia. Ophelia, his girlfriend is in fact convinced beyond doubt that Hamlet has gone crazy. Hamlet is scolded by Gertrude for upsetting his uncle but Hamlet is able to evade the situation by letting his insanity as he conducts an investigation on what could have actually happened to his father. However, Hamlets ability to think and speak in a lo gical way shows that he is not really insane as portrayed throughout the play. Hamlet is as rational as everyone else when he is around his friend Horatio. In various instances throughout the play, Hamlet shows his trust in Horatio. Moreover, Hamlet acts irrationally and speaks out his opinions about