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Numerical Illustrations of Key Financing Policy Results under the Debt–Equity Security Space

In: Corporate Policies in a World with Information Asymmetry

Author

Listed:
  • Vipin K Agrawal
  • Ramesh K S Rao

Abstract

The following sections are included:Illustrating Results for Proposition 9Hazard Rate IA is Negative (The Most Concave Security Exists and It is Debt)Graph of $NPV_h^C (F)$ versus A for pooled contractsVerification of resultHazard Rate IA is Zero (Indifference between Debt and Equity)Hazard Rate IA is Positive (Most Concave Security Exists and It is Equity)Hazard Rate IA Sign Changes (Most Concave Security does Not Exist and Security Issued Depends on Financing Needs)Illustrating Results for Proposition 10aHazard Rate IA is First Positive then Negative (Firm Issues Debt if M is High and Equity if It is Low)Hazard Rate IA is First Negative then Positive (Firm Issues Debt if M is Low and Debt-Equity if It is High)Illustrating Results for Proposition 10cDownside IA and Equity IssuanceRisk and Equity Issuance

Suggested Citation

  • Vipin K Agrawal & Ramesh K S Rao, 2015. "Numerical Illustrations of Key Financing Policy Results under the Debt–Equity Security Space," World Scientific Book Chapters, in: Corporate Policies in a World with Information Asymmetry, chapter 10, pages 87-100, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814551311_0010
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