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Investors can use homemade leverage to change an unleveraged firm into a leveraged firm. [ 1 ] [ 2 ] According to the Corporate Finance Institute , "the founding philosophy of homemade leverage is the Modigliani–Miller theorem , which assumes an efficient market and the absence of corporate taxes and bankruptcy costs."
Accounting ethics is primarily a field of applied ethics and is part of business ethics and human ethics, the study of moral values and judgments as they apply to accountancy. It is an example of professional ethics. Accounting was introduced by Luca Pacioli, and later expanded by government groups, professional organizations, and independent ...
The philosophy of accounting is the conceptual framework for the professional preparation and auditing of financial statements and accounts.The issues which arise include the difficulty of establishing a true and fair value of an enterprise and its assets; the moral basis of disclosure and discretion; the standards and laws required to satisfy the political needs of investors, employees and ...
The key Modigliani–Miller theorem was developed for a world without taxes. However, if we move to a world where there are taxes, when the interest on debt is tax-deductible , and ignoring other frictions, the value of the company increases in proportion to the amount of debt used. [ 3 ]
In 2012, the head of AP Grading, Trevor Packer, stated that the reason for the low percentages of 5s is that "AP World History is a college-level course, & many sophomores aren't yet writing at that level." 10.44 percent of all seniors who took the exam in 2012 received a 5, while just 6.62 percent of sophomores received a 5.
Charlie Munger, vice chairman of Berkshire Hathaway (BRK-A, BRK-B) and a legend of the investing world, died on Nov. 28 at the age of 99.To commemorate Munger's monumental legacy, we’ve compiled ...
For example, assume a party buys $100 of a 10-year fixed-rate treasury bond and enters into a fixed-for-floating 10-year interest rate swap to convert the payments to floating rate. The derivative is off-balance sheet, so it is ignored for accounting leverage. Accounting leverage is therefore 1 to 1.
External ethics looks at the impacts that their business practices, such as who they loan to or invest in, will have on society and the environment. In applying external ethics, one looks at how the products of banks can be used unethically, for example how borrowers use the money that is lent out by the bank.