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© 2013

Finance – Fundamental Problems and Solutions

Book

Part of the SpringerBriefs in Business book series (BRIEFSBUSINESS)

Table of contents

  1. Front Matter
    Pages i-ix
  2. Zhiqiang Zhang
    Pages 1-8
  3. Zhiqiang Zhang
    Pages 23-50

About this book

Introduction

As indicated by the title, this book focuses on fundamental problems in finance: a logical dilemma in valuation, stock valuation methods/models, risk valuation, and optimal capital structure. It presents an innovative approach to logic and quantitative reasoning (without advanced mathematics) that delivers valuable results ---- convincing solutions to these problems. Readers in finance will definitely be interested in these solutions as well as the methods. In fact, these fundamental problems are essential in the field of finance, and they have remained unsolved (or partly unsolved) for decades. The solutions offered in this book are all sound in theory and feasible in practice, and will hopefully benefit both theoretic al research and practical decision-making.

Keywords

Asset Pricing Bankruptcy Cost Capital Structure Risk Premium Valuation

Authors and affiliations

  1. 1., Business SchoolRenmin University of ChinaBeijingChina, People's Republic

About the authors

Zhiqiang Zhang is an associate professor in the finance area at the School of Business, Renmin University of China. He currently teaches courses on corporate finance, valuation, real options etc. for the undergraduate and graduate students as well as MBA students. His primary research interests are in corporate finance and asset pricing. He has published more than 30 papers in domestic and international journals, and he has written and translated (from English to Chinese) more than 10 books in the area of finance.

His research can be summarized as three series in finance. The first series mainly concerns valuation, where he develops a brand-new approach. Based on the new valuation method, he creates a new stock valuation model, which can overcome most of the shortcomings of traditional models (such as the Gordon growth model); he further derives the theoretical models of P/E, P/B, and P/S, which are useful in stock and portfolio valuation as well as stock market bubble measuring. The second series mainly focuses on incorporating risk into valuation. He derives the theoretical models of certainty equivalents, risk equivalents (a brand new method for assessing risk), risk premiums and the new capital asset pricing model (CAPM), which accounts for both systematic and non-systematic risks. This may be the most important advance in this area since Sharpe’s CAPM (1964). The third series primarily examines firm’s capital structure decisions. Here the author solves the problem of optimal capital structure by creating new models of tax shield and bankruptcy cost and further deriving the optimal capital structure model based on the trade-off between the tax shield and the bankruptcy cost, potentially the most essential progress in this area since MM model I and II (1958 and 1963).

All solutions and models presented are theoretical and decision-oriented, and hence have broad application potential in academic research as well as in practical decision-making, especially in valuation, investment, capital budgeting, risk management, financing and capital structure decision, etc.

Bibliographic information

  • Book Title Finance – Fundamental Problems and Solutions
  • Authors Zhiqiang Zhang
  • Series Title SpringerBriefs in Business
  • Series Abbreviated Title SpringerBriefs in Business
  • DOI https://doi.org/10.1007/978-3-642-30512-2
  • Copyright Information The Author(s) 2013
  • Publisher Name Springer, Berlin, Heidelberg
  • eBook Packages Business and Economics Economics and Finance (R0)
  • Softcover ISBN 978-3-642-30511-5
  • eBook ISBN 978-3-642-30512-2
  • Series ISSN 2191-5482
  • Series E-ISSN 2191-5490
  • Edition Number 1
  • Number of Pages IX, 108
  • Number of Illustrations 8 b/w illustrations, 2 illustrations in colour
  • Topics Finance, general
  • Buy this book on publisher's site
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