The Myth Of The Earnings Yield

The Myth of the Earnings contribute The Myth of the Earnings Yield Essay written by Sam Vaknin Sam Vaknins Psychology, Philosophy, economics and Foreign Affairs Web Sites A very slight minority of firms distribute dividends. This truism has revolutionary implications. In the absence of dividends, the foundation of most - if not all - of the financial theories we mesh in order to determine the value of shares, is falsified.

These theories rely on a few implicit and explicit assumptions: (a) That the (fundamental) value of a share is closely correlated (or even equal to) its commercialize (stock exchange or transaction) price (b) That price movements (and volatility) are loosely random, though correlated to the (fundamental) value of the share (will always cope with to that value in the long term) (c) That this fundamental value responds to and reflects new-fangled information efficiently (old information is wide of the marky incorporated in it) Investors are supposed to d...If you want to get a full essay, order it on our website: Ordercustompaper.com

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