Abstract
An important area of finance involves making decisions regarding investment and dividend policies over time and ways to finance them. Among the ways of financing such policies are: issuing equity, retaining earnings, borrowing money, etc. It is possible to model such situations as optimal control problems; see, for example, Davis and Elzinga (1971), Elton and Gruber (1975) , and Sethi (1978b) . Some of these models are simple to analyze and they yield useful insights.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Davis BE (1970) Investment and rate of return for the regulated firm. Bell J Econ Manag Sci 1:245–270
Davis BE, Elzinga DJ (1971) The solution of an optimal control problem in financial modeling. Oper Res 19:1419–1433
Elton E, Gruber M (1975) Finance as a dynamic process. Prentice-Hall, Englewood Cliffs
Gordon MJ (1962) The investment, financing and valuation of the corporation. Richard D. Irwin, Homewood
Isaacs R (1965) Differential games. Wiley, New York
Krouse CG (1972) Optimal financing and capital structure programs for the firm. J Financ 27:1057–1071
Krouse CG, Lee WY (1973) Optimal equity financing of the corporation. J Financ Quant Anal 8:539–563
Miller MH, Modigliani F (1961) Dividend policy, growth, and valuation of shares. J Bus 34:411–433
Perrakis S (1976) A note on optimal equity financing of the corporation. J Financ Quant Anal 11(1):157–164
Sethi SP (1973d) A note on modeling simple dynamic cash balance problems. J Financ Quant Anal 8:685–687; Errata, 13, 585–586
Sethi SP (1978b) Optimal equity financing model of Krouse and Lee: corrections and extensions. J Financ Quant Anal 13(3):487–505
Sethi SP (1996) When does the share price equal the present value of future dividends? - a modified dividend approach. Econ Theory 8:307–319
Sethi SP, Thompson GL (1970) Applications of mathematical control theory to finance. J Financ Quant Anal 5(4–5):381–394
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2019 Springer Nature Switzerland AG
About this chapter
Cite this chapter
Sethi, S.P. (2019). Applications to Finance. In: Optimal Control Theory. Springer, Cham. https://doi.org/10.1007/978-3-319-98237-3_5
Download citation
DOI: https://doi.org/10.1007/978-3-319-98237-3_5
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-98236-6
Online ISBN: 978-3-319-98237-3
eBook Packages: Business and ManagementBusiness and Management (R0)