This text presents a body of work by two Nobel Prize economists, Franco Modigliani and Merton H. Miller, who came to prominence in the 1950s and have dominated the world of finance ever since. Its inspiration is based on positive feedback across my bookboon series, which welcomed clear explanations of their controversial hypotheses and suggested that they ought to be included in a single text as a reference point for wider study.

1. An Overview
   1. The Foundations of Finance: An Overview
   2. The Development of Financial Analysis
   3. Questions to Consider
   4. Fisher’s Legacy and Modigliani-Miller
   5. Summary and Conclusions
   6. Selected References
2. How to Value a Share
   1. The Capitalisation Concept
   2. The Capitalisation of Dividends and Earnings
   3. The Capitalisation of Current Maintainable Yield
   4. The Capitalisation of Earnings
   5. Summary and Conclusions
   6. Selected References
3. The Role of Dividend Policy
   1. The Gordon Growth Model
   2. Gordon’s ‘Bird in the Hand’ Model
   3. Summary and Conclusions
   4. Selected References
4. MM and Dividends
   1. The MM Dividend Hypothesis
   2. The MM Hypothesis and Shareholder Reaction
   3. The MM Hypothesis: A Corporate Perspective
   4. Summary and Conclusions
   5. Selected References
5. Debt Valuation and the Cost of Capital
   1. Capital Costs and Gearing (Leverage): An Overview
   2. The Value of Debt Capital and Capital Cost
   3. The Tax-Deductibility of Debt
   4. The Impact of Issue Costs on Equity and Debt
   5. Summary and Conclusions
   6. Selected References
6. Capital Gearing and the Cost of Capital
   1. The Weighted Average Cost of Capital (WACC)
   2. WACC Assumptions
   3. The Real-World Problems of WACC Estimation
   4. Summary and Conclusions
   5. Selected Reference
7. MM and Capital Structure
   1. Capital Structure, Equity Return and Leverage
   2. Capital Structure and the Law of One Price
   3. MM and Proposition I (the Arbitrage Process)
   4. MM and Real World Considerations
   5. Summary and Conclusions
   6. Selected References
8. Portfolio Selection and Risk
   1. Modern Portfolio Theory and Markowitz
   2. Modern Portfolio Theory and the Beta Factor
   3. Modern Portfolio Theory and the CAPM
   4. Summary and Conclusions
   5. Selected References
9. MM and the CAPM
   1. Capital Budgeting and the CAPM
   2. The Estimation of Project Betas
   3. Capital Gearing and the Beta Factor
   4. Capital Gearing and the CAPM
   5. Modigliani-Miller and the CAPM
   6. Summary and Conclusions
   7. Selected References