perfect capital market
when buying and selling do not affect prices a situation in which the decisions of buyers and sellers have no effect on market price in a capital market
Moving from L to the optimal level is quite easy. Borrow money and buy back some shares. Moving from M back to the optimal level is, in theory, equally easy, but in practice may face challenges depending on market conditions. Capital structure strategy is discussed in the article, Capital Structure
By John C. Groth
Definitions of ’perfect capital market’ and meaning of ’perfect capital market’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’perfect capital market’ and other financial terms with our online QFINANCE Financial Dictionary.