I
indexo
Member
Hi,
I am confused.
Is the equity valuation's i the same as required rate of return?
In the textbook,
under equity valuation, 'i' used to value equity = long term gov yield + equity risk premium
under required rate of return, = risk free real rate of return + expected inflation + equity risk premium.
Are they different? And if so why?
If they are equal, where did the expected inflation go under equity valuation?
Appreciate your help.
Thanks,
indexo
I am confused.
Is the equity valuation's i the same as required rate of return?
In the textbook,
under equity valuation, 'i' used to value equity = long term gov yield + equity risk premium
under required rate of return, = risk free real rate of return + expected inflation + equity risk premium.
Are they different? And if so why?
If they are equal, where did the expected inflation go under equity valuation?
Appreciate your help.
Thanks,
indexo