A Note on the Computation of the Equity Premium and the Market Value of Firm Equity

Turnovsky (1995) derives in a continuous-time model of a decentralized economy that the correct specification of the firm's objective function is to maximize the initial value of its outstanding securities. The firm value is the discounted flow of real earnings. For the discrete-time version of the model, we show that the correct computation of the firm value needs to be modified. Depending on the specific formula employed, different values of the equity premium result

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Year of publication:	2010
Authors:	Heer, Burkhard
Other Persons:	Maußner, Alfred (contributor)
Publisher:	[2010]: [S.l.] : SSRN
Subject:	Risikoprämie \| Risk premium \| Theorie \| Theory \| Unternehmensbewertung \| Firm valuation \| Kapitalwertmethode \| Net present value method \| Betriebsvermögen \| Corporate assets \| Einnahmen \| Revenue \| Marktwert \| Market value

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Extent:	1 Online-Ressource (14 p)
Series:	CESifo Working Paper Series ; No. 3042
Type of publication:	Book / Working Paper
Language:	English
Notes:	Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 2010 erstellt
Other identifiers:	10.2139/ssrn.1601189 [DOI]
Classification:	G12 - Asset Pricing ; C63 - Computational Techniques ; E22 - Capital; Investment (including Inventories); Capacity ; E32 - Business Fluctuations; Cycles
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10013143832