Invoking them without modeling them is a cop-out (Myers 1984, p. 578).Myers is here referring to the theory that large capital adjustment costs might explain the observed wide variation in actual debt ratios. We can similarly criticize the static trade-off theory of capital structure as...

This paper demonstrates a simple way of deriving both the Capital Asset Pricing Model (CAPM) and a capital asset's beta value from the Capital Market Line (CML). The CML model is extended to include a series of isocorrelation curves along which the returns of any portfolio can be plotted...