Question
P t =(D t+1 )/(1+rp+rf)+(E t P t+1 )/(1+rp+rf) assume the log (E(x))=E(log(x)) and assume no dividends are paid out. Derive a mathematical expresssion that
Pt=(Dt+1)/(1+rp+rf)+(EtPt+1)/(1+rp+rf)
assume the log (E(x))=E(log(x)) and assume no dividends are paid out. Derive a mathematical expresssion that describes the evolution of (log) stock prices over time. Describe in words the behavior of log stock prices. Can you tell whether stock prices at time t will go up or down if the economy booms in period t+3? Show why or why not.
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International Financial Markets And The Firm
Authors: Piet Sercu, Raman Uppal
1st Edition
1861523548, 978-1861523549
