Keynes 1931 the group to which an individual belongs

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Unformatted text preview: but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.” – Keynes 1931 “The group to which an individual belongs is the ground upon which he stands, which gives or denies him social status, gives or denies him security and help.” – Lewin 1940 The social structure of markets and the group dynamics of market participants are key elements of effective financial regulation and risk management. Fixed Income VII: R. J. Hawkins Econ 136: Financial Economics 35/ 35 Price as PV of Future Cash Flows Our basic pricing paradigm is: T Price = t =1 CFt (1 + rS )t For equities we interpret this as follows: Price = Value Per Share (V0 ). T = ∞. CFt = expected dividends per share (Dt ). rS = required rate of return on stock. Fixed Income VII: R. J. Hawkins Econ 136: Financial Economics 3/ 11 The DDM for Constant Dividend Growth The Gordon Growth Model (Gordon & Shapiro, 1956) Assume a constant dividend growth rate g : Dt = D0 (1 + g )t V0 = ∞ t =1...
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This note was uploaded on 01/23/2014 for the course ECON 136 taught by Professor Szeidl during the Fall '08 term at University of California, Berkeley.

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