Problems of Assessing Risk and Return Inside an Operating Business

Alan Bainbridge

Chapter 9 in Risk, Portfolio Management and Capital Markets, 1992, pp 161-176 from Palgrave Macmillan

Abstract: Abstract The process of investment in the UK can be considered as a kind of cash waterfall, whereby capital flows from the investing public via financial intermediaries through the company directors and finally reaching the operational managers who purchase physical assets and human skills in order to create wealth. Legal sanctions, competitive forces and (hopefully enlightened) self-interest act as a pump which forces profits, in the form of cash, back to the shareholders. It is the duty of managers to use shareholders’ funds for the purpose of maximising shareholders’ wealth.

Keywords: Discount Rate; Cash Flow; Excess Return; Operating Business; Share Price (search for similar items in EconPapers)
Date: 1992
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DOI: 10.1007/978-1-349-11666-9_10

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