I came across this little nugget for this first time in today’s Mises Dailys. From the Wikipedia article:
…what?
As in per loans or per shares. In a perfectly efficient market the cost of loans and the cost of issuing shares would be equalized. That’s the idea. But of course, this is a never-ever fantasy land.
Just for clarification, I thought mainstream economists always considered the market to be “efficient”?
Usually debt added MV because of the tax shield. If there is no taxes you lose the shield and the major advantage of D>E financing. With addition of perfect markets then you get d=e risk as the guy above said.
Well, you have double-taxation for once. And as long as financial markets are regulated, than some mainstream economist must be assuming that there are ‘imperfections’ and ‘failures’ in this market.