1.  Conclusion: What We Do and Do Not Know about Finance Principles of Corporate Finance Brealey and Myers Sixth Edition Slides by Matthew Will Chapter 35 © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw Hill

2. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw Hill 35- 2 Topics Covered  What We Do Know  What We Do Not Know

3. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw Hill 35- 3 7 Most Important Ideas in Finance  Net Present Value  Capital Asset Pricing Model (CAPM)  Efficient Capital Markets  Value Additivity & Law Conservation of Value  Capital Structure Theory  Option Theory  Agency Theory

4. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw Hill 35- 4 10 Unsolved Problems In Finance  How major decisions are made?  What determines project risk and PV ?  Risk and return - What have we missed?  How important are the exceptions to the Efficient Market Theory?  Is management an off-balance-sheet liability?

5. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw Hill 35- 5 10 Unsolved Problems In Finance  How can we explain the success of new markets and new securities?  How can we resolve the dividend controversy?  What risks should a firm take?  What is the value of liquidity?