Capital Structure Theories Under Real-World Conditions

This video covers the following learning objectives:

• Compare and contrast capital structure theories, including:

  • Modigliani & Miller Proposition I (No Taxes)

  • Modigliani & Miller Proposition II (With Taxes)

  • Trade-Off Theory

  • Pecking Order Theory

• Apply capital structure concepts to real-world corporate finance decisions

• Use Excel to model the impact of tax shields, debt levels, and capital structure on firm value and WACC

• Understand how real-world factors (taxes, bankruptcy risk, market imperfections) influence capital structure strategy

• Identify how industry differences (e.g., tech firms vs. utilities) affect optimal financing decisions

• Align theoretical knowledge with exam requirements for:

  • Canadian Securities Course (CSC)

  • CFA Level I

  • Financial Risk Manager (FRM)

  • Certified Financial Planner (CFP)