That is the premise on which temporal discounting, a major tool in economic theory, is based on. If we want to compare present and future payoffs, we must account for the fact that we tend to value ...

The percentage rate required to calculate the present value of a future cash flow. For example if investing at 4% interest, then the present value is discounted by 4% as it is worth less than future ...

The Journal of Business, Vol. 79, No. 2 (March 2006), pp. 941-961 (21 pages) In this paper, we construct a new variance bound on any stochastic discount factor (SDF) of the form \documentclass{aastex} ...

Par and zero coupon curves are two common ways of specifying a yield curve. Par coupon yields are quite often encountered in economic analysis of bond yields, such as the Fed H.15 yield series. Zero ...

There are many methods to estimate the value of a company, but one of the most fundamental and frequently used is Discounted Cash Flow (DCF) analysis. The general idea behind the method is this: the ...

DDM values stocks based on sum of all future dividends using a company's cost of capital. Most common DDM, the Gordon Growth Model, calculates stock price by dividing next year’s expected dividend by ...