This free book of Exercises reinforces theoretical applications of stock market analyses as a guide to Corporate Valuation
and Takeover and other texts in the bookboon series by Robert Alan Hill. The volatility of global markets and individual
shares, created by serial financial crises, economic recession and political instability means that investors (private,
institutional, or corporate) cannot rely on “number crunching”.
The 2007 global financial crisis ignited by reckless bankers and their flawed reward structures will be felt for years to come.
Emerging from the wreckage, however, is renewed support for the over-arching objective of traditional finance theory,
namely the long-run maximisation of shareholder wealth using the current market value of ordinary shares (common
stock) as a benchmark.
The macroeconomic performance of individual countries varied markedly during the 2007–09
global financial crisis. While China’s growth never dipped below 6% and Australia’s worst
quarter was no growth, the economies of Japan, Mexico and the United Kingdom suffered
annualised GDP contractions of 5–10% per quarter for five to seven quarters in a row. We
exploit this cross-country variation to examine whether a country’s macroeconomic
performance over this period was the result of pre-crisis policy decisions or just good luck.
The answer is a bit of both.