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Wednesday, 25 February 2015

If one now assumes that 100% of the earnings are paid as dividend (D=E).

http://en.wikipedia.org/wiki/Fed_model

 If one now assumes that 100% of the earnings are paid as dividend (D=E), the growth rate is equal to zero, and the equity risk premium is also equal to zero, one gets the Fed model: E/P=R_{\text{f}}.

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