Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 30, 2023 erstellt
Description:
This paper formulates the Discounted Cash Flows formed by an underlying economic activity, of any kind, following a binomial evolution and introducing the possibility of measuring its effects on its value. This binomial economic activity is described in accounting terms, able to capture the complex lag effects (e.g. payment terms) at work in the formation of the cash flows, underlying Discounted Cash Flows. This framework reveals first the connection of risk with the growth of the same economic activity, showing positive compositional effects at long-term horizons, becoming erosive to short-term due to the lag effects affecting the formation of cash flows. These elements help explain observations of the short-term erosive effects of activity growth on stock returns, as well as the positive effects of risk for investors projecting to more long-term horizons, revealing an asymmetry in perception of value, risk and growth as a function of the investment horizon