Once a company issues shares (common stock) and receives the proceeds, it has no direct involvement with their subsequent transactions on the capital market, or the price at which they are traded. These are matters for negotiation between existing shareholders and prospective investors, based on their own financial agenda. As a basis for negotiation, however, the company plays a pivotal agency…
Financial analysis has never been an exact science. Occasionally, the theoretical models upon which it is based are even “bad” science. The root cause is that economic decisions undertaken in a real world of uncertainty are invariably characterised by hypothetical human behaviour, for which there is little empirical evidence. Thus, a financial model may satisfy a fundamental requirement of …
It is a basic assumption of finance theory, taught as fact in Business Schools and advocated at the highest level by vested interests, world-wide (governments, financial institutions, corporate spin doctors, the press, media and financial web-sites) that stock markets represent a profitable long-term investment. Throughout the twentieth century, historical evidence also reveals that over any fi…