Capital Structure

Capital Structure Merrill Lynch Investment Banking Institute July 2008 Prof. Michael R. Roberts 1 Topic Overview q How should we think about capital structure? » A benchmark: the M&M irrelevance propositions q When is capital structure relevant? » Taxes» Bankruptcy costs» Agency costs (benefits)» Asymmetric information 2 The Intuition Behind M&M q Buy a house today for $100,000 and sell [...]