Corporate Debt and Financing Decisions

This lecture covers the impact of corporate debt on financing decisions, focusing on the Capital Asset Pricing Model (CAPM) and the Security Market Line. It explains how debt and equity mix affects expected returns, risk premiums, and the efficiency of the market portfolio. The lecture also delves into the implications of the COVID crisis on corporate debt issuance and investor behavior, highlighting the importance of credit quality and investor demand. Additionally, it discusses the role of net debt in different industries and the theoretical framework of capital structure irrelevance in a frictionless world.