In this paper we discuss the required return on equity for a simple project with a finite life. To determine a project's cost of equity, it is quite common to use Modigliani and Miller's ‘Proposition II' (1963). However, if the assumptions of MM do not hold, ‘Proposition II' will lead to...

We document that net equity issuance is considerably more sensitive to aggregate stock returns and Q's than to firm-level stock returns and Q's. Very similar patterns also emerge when we look at merger activity. In light of earlier work (Campbell 1991, Vuolteenaho 2002) which finds that...