A Note on a Simplified Approach to the Valuation of Risky Streams

This paper develops an approach to the valuation of risky streams defined by a class of stochastic processes. The valuation is given by a linear functional, which is an extension of the market valuations of the marketed assets. Provided that there exists an interest rate process, it is possible to represent the valuation functional as an appropriate expectation defined on the space of integrable random variables. The paper concludes with the relationship of our approach to the existing literature