Stone's Conjecture on Fair-Return Processes: Comments and Correction

Prem Prakash

Bell Journal of Economics, 1977, vol. 8, issue 2, 601-604

Abstract: Taking a discounted-dividend stock valuation model in which the appropriate fair-return for any future period is itself a random variable, Stone (1975) arrives at a necessary and sufficient condition for the stock values to conform to a fair-return process. The present paper shows that Stone's claim is incorrect. However, the postulated stock values do constitute a fair-return process if the appropriate fair returns for all periods are nonrandom as in Samuelson (1973) or if the expected values of future dividends are constants under the stochastic process -- a case of little interest.

Date: 1977
References: Add references at CitEc
Citations:

Downloads: (external link)
http://links.jstor.org/sici?sici=0361-915X%2819772 ... O%3B2-3&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rje:bellje:v:8:y:1977:i:autumn:p:601-604

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in Bell Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().