In a prior post I discussed why the price of debt has tiny influence on investments. What about the price of equity? Firms normally use (considerably) more equity than debt to finance their investments. So the price of equity need to matter a lot more. In a current study , Murray Frank and Tao Shen investigate how the expense of equity and the weighted average expense of capital (WACC) influence investments of US firms. Remarkably, they locate that the cost of equity and the WACC are positively connected to corporate investments. Firms with a greater estimated cost of equity and WACC tend to invest significantly much more. That is a extremely strange outcome. We would anticipate firms with a high expense of capital to invest significantly less, not a lot more.
At some of the best schools, a professor would teach three classes a year (either 1/two or three/). In contrast, at a teaching school, he would teach at least six courses a year, and typically much more (I have some friends that teach a 4/four load, and faculty in the humanities at times teach even more). As a benchmark, the initial college I taught at out of grad school had a two/2 load, my most recent position came with a three/3 load, and my new job will have a 2/two load.
The major lesson from the experiment with the Euro is that a currency location cannot be set up with out a central political body that is robust enough to enforce the rules of the currency area. A single can have separate states within the region, but, as in the United States, there should be a political union with adequate authority to dominate the individual elements of the area.
There is often a need to have for accountants and …Continue reading