The Myth Of The Earnings Yield

The Myth Of The Earnings Yield A very sylphlike minority of firms distribute dividends. This truism has revolutionary implications. In the absence of dividends, the foundation of most - if not all - of the financial theories we lock in order to determine the value of sh atomic number 18s, is falsified.

These theories rely on a few implicit and explicit assumptions: (a) That the (fundamental) "value" of a share is closely correlated (or even equal to) its tap (stock exchange or transaction) price (b) That price movements (and volatility) are largely random, though correlated to the (fundamental ) "value" of the share (will always aline to to that "value" in the long term) (c) That this fundamental "value" responds to and reflects smart information efficiently (old information is adequatey incorporated in it) Investors are supposed to discount the stream of all coming(prenominal) income from the share (using unmatched of a myriad of possible rate - all hotly disputed)....If you want to get a full essay, order it on our website: OrderCustomPaper.com

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