2nd blog

Another factor that the module is about is risk, I havent blogged for a few weeks to try and evaluate the lectures and do some reading. I now know that debt is cheaper than equity because of the risk factor, If you are working internationally you have to be sure of rules and regulations eg: how much tax you pay because it may increase the risk. When looking at ventures you need to ask yourself does it maximise shareholder wealth?, not just does it make a profit. If it maximises shareholder wealth and it gives you a positive MPV you should persue it no matter what the hurdle rate is as long as it is a positive. People will buy a riskier share because of a greater return. The stock market needs huge suppliers and a huge demand. To get the correct price the market has to be close to perfection, if imperfections are large the whole system is brought into question that the shares arent fair.By looking at graphs of reaction and efficiency in lecture,it shows to me that the market isnt fair but not by alot.