DESIGNING THE FINANCIAL STRUCTURE OF A PREFERRED INVESTMENT

Doron Nisani, Department of Business Administration, University of Haifa, Israel

Published in

INTERNATIONAL JOURNAL OF BUSINESS RESEARCH
Volume 19, Issue 1, p51-56, March 2019

ABSTRACT

One of the challenges of public offering is efficiently competing with other firms over the investors’‘ capital. Each firm strives to design financial investments that, on the one hand, would be profitable, and on the other, would attract the investors’‘ capital. These two restrictions can be simplified into the financial investment’‘s return and risk: increasing the investment’‘s return reduces the raised capital, but decreasing the investment’‘s risk increases the firm’‘s credit risk. This paper invokes the Riskiness Index to modify the investment’‘s structure using its statistical moments, while preserving the required investment’‘s return and risk.

Keywords

Expected Utility, Stochastic Dominance, Riskiness Index, Public Offering, Investment Management


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