This article explores the behavior of the stock market in Colombia with the information given by the Bolsa de Bogota Index (Indice de la Bolsa de Bogota, IBB). The index is analyzed from January, 1930 to December, 1998. The inflation rate covers the same period; the inflation rate as measured by...

A nuestros estudiantes de Finanzas les enseñan que lo más importante en ese área es saber calcular y utilizar la tasa de interés efectiva o capitalizada. Para algunos de nuestros profesores, eso es todo; si un estudiante llega sin saber esa ficción, no sabe Finanzas. Más aun, una gran...

I present a set of conditions for defining risky debt associated to cash flow and not to accounting earnings. I explain why realization of tax shields for finite cash flows in any period of time t are correlated to Earnings before Interest and Taxes and are not correlated to interest expenses at...

In these slides we discuss the practical and conceptual difficulty of finding an Optimal Capital Structure. We propose a normative approach we call Implicit Bankruptcy Costs Theory and how to proceed to find the optimal capital structure and value with period-to-period constant and variable...

Cuando se proyectan estados financieros hay que tener cuidado de construir un modeloconsistente y correcto. Esto no es una tarea fácil. Incluso el experto en modelaje másexperimentado puede incurrir en equivocaciones. Esto es especialmente relevante cuandose construye un modelo financiero sin...

When calculating Tax Savings, TS, we are confronted with a strange mix of accounting accrual and market value when involving TS in the calculation of the Weighted Average Cost of Capital, WACC, or the Cost of Equity, Ke. Firms earn the right to TS once they accrue the interest expense and they...

Most finance textbooks (See Benninga and Sarig, 1997, Brealey, Myers and Marcus, 1996, Copeland, Koller and Murrin, 1994, Damodaran, 1996, Gallagher and Andrew, 2000, Van Horne, 1998, Weston and Copeland, 1992) present the Weighted Average Cost of Capital WACC calculation as: WACC = d(1-T)D% +...