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To: Alomex who wrote (146841)	9/4/2002 4:24:35 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 164684

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To: Alomex who wrote (146841)	9/4/2002 4:24:38 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 164684

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To: Alomex who wrote (146841)	9/4/2002 4:24:39 PM
From: Oeconomicus	Respond to of 164684

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To: Alomex who wrote (146841)	9/4/2002 4:24:40 PM
From: Oeconomicus	Respond to of 164684

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To: Alomex who wrote (146841)	9/4/2002 4:30:02 PM
From: Oeconomicus	Respond to of 164684

In fact, there is a famous paper from Modigliani and Miller which argues that debt and equity can be used interchangeably. Ahh, but the tax-deductibility of interest changes the math to favor leverage (to a point). There's also the theory that equity in a leveraged firm is really just a call option on the assets, with the strike price equal to the face amount of the debt and the expiry equal to the maturity date. But all this theorizing is making me nostalgic for the easy life of a grad student. ;-) PS: I hope that doesn't trigger another options argument. PPS: Is "D" any relation to Milton? PPPS: Sorry for all the now deleted posts. Something odd going on with SI a few minutes ago.