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How you can predict future evolution of value of shares

Could we suppose that, as we cannot predict the future evolution of the value of shares, a good estimation would be to consider this constant during the next five years?

E

Expert

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Such affirmation is an error. The relation among the value of the shares of various years is: Et = Et-1 (1+Ket) – CFact. The shares value is constant (Et = Et-1) only when CFact = Et-1 Ket. It happens in non-growing perpetuities.

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