In this episode of Magic Markets, we talked about the “capital stack” in corporates and how they blend debt and equity into a capital structure that works for the business.
After setting the scene with a short discussion on central banks, we covered topics like:
• The equity to debt spectrum, with mezzanine finance in the middle
• Examples of the types of spreads you can expect to see across different sources of capital
• The concept of weighted average cost of capital
• The benefit of having debt in an organisation and how this forces management to focus
• The relationship between debt and other policy decisions, like dividends and share buybacks
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