Stochastic Discounted Cash Flow

Kruschwitz, Lutz; Löffler, Andreas

doi:10.1007/978-3-030-37081-7

Cited by 8 publications

(1 citation statement)

References 17 publications

(22 reference statements)

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“…Variations in interest rates can substantially affect the current value of future cash flows, which is a fundamental element of stock valuation. [7] When interest rates increase, the discount rate utilized in discounted cash flow (DCF) analysis also escalates. This will lead to an increased discount factor being applied to future cash flows, thereby decreasing their current value.…”

Section: Discounted Cash Flows and Valuation Modelsmentioning

confidence: 99%

The Impact of Federal Reserve Interest Hike: Currency, Stock and Bond Market

2024

HBEM

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The paper investigates the consequences of interest rate hikes initiated by the Federal Reserve on various financial markets. This comprehensive analysis examines the relationships between interest rate changes and their effects on currency, stock, and bond markets, which also discuss the potential scenario or solutions in respond to the rate hike. By analyzing data from different regions of the world, the paper discusses how these monetary policy decisions influence market dynamics, investor sentiment, and overall economy. Federal Reserve raising interest rate has impacted the world from various aspects, which each’s country government needs to plan strategically to respond to the impact toward currency, stock, and bond market. The findings presented in this paper contribute valuable insights for policymakers, investors, and economists seeking a deeper understanding of the intricate interplay between central bank actions and financial market reactions, which it is important to understand the impacts and apply monetary policy in order to ensure economic stability.

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Section: Discounted Cash Flows and Valuation Modelsmentioning

confidence: 99%

The Impact of Federal Reserve Interest Hike: Currency, Stock and Bond Market

2024

HBEM

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A note on the cost of capital with fixed payout ratios

Diedrich

Dierkes

Gröger

2022

Rev Quant Finan Acc

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The insights of Modigliani and Miller (Am Econ Rev 53:433–443, 1963) and Miles and Ezzell (15:719–730, https://doi.org/10.2307/2330405, 1980) on the cost of capital of firms rank among the most important results in financial theory. The underlying assumptions regarding the financial policy, however, can hardly be reconciled with empirical findings. We investigate the implications of an alternative approach that is characterized by a fixed payout ratio. By introducing additional assumptions about investment opportunities, we find relationships between the cost of equity of levered and unlevered firms. The results contribute to explaining empirical findings and open the possibility to base valuation techniques on realistic and yet practicable assumptions.

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