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?
Expert
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.
Flow variables: Any variable, whose magnitude is evaluated over a time period, is termed as glow variable.
Capital formation: It is an increase in the stock of capital in particular period is termed as capital formation.
Real gross domestic product: If GDP of a particular year is estimated or evaluated on the basis of the base year prices it is termed as real gross domestic product.
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