Does a Positive Perpetual Growth Rate Exist?

Zhiqiang Zhang ()
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Zhiqiang Zhang: Renmin University of China

Chapter Chapter 2 in Finance – Fundamental Problems and Solutions, 2013, pp 9-21 from Springer

Abstract: Abstract This chapter explores a common variable, perpetual grow rate, in financial or valuation models and reveals that it is not sure to be positive or negative, which is referred to as a growth paradox. Based on Moody’s default rate data, this chapter further reveals some insights related to this growth paradox and concludes that finance as a science is just on its initial stage, which is similar to Astronomy in the time of Nicolaus Copernicus (1473-1543).

Keywords: Perpetual Growth Rate; Growth Paradox; Bankruptcy Losses; Bankruptcy Probability; Discount Rate (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spbrcp:978-3-642-30512-2_2

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DOI: 10.1007/978-3-642-30512-2_2

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