The assumption that a company’s current share price is determined – from the expected dividend payments – discounted by the investors’ underlying return for holding the share in question (cost of equity: the risk-free interest rate plus equity risk premium). – Cf. ECB Monthly Bulletin, July 2008, pp. 35 ff. (calculation of the cost of equity using a model; overviews).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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