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Track W7-3: Return Predictability
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| Presentations | ||
Dogs and cats living together: A defense of cash-flow predictability ASU Present-value logic says that aggregate stock prices are driven by discount-rate and cash-flow expectations. Dividends and net repurchases are both cash flows between the firm and household sectors. Aggregate dividend-price ratios do not forecast dividend growth, but do robustly forecast future buybacks and issuance. Long-run variance decompositions say that discount-rate and cash-flow expectations contribute equally to aggregate dividend-price-ratio variation.
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