Join 924 investors who get actionable, evidenced-based wealth management insights delivered directly to their inbox.
Subscribe

Arbitrage Limits Cause Mispricing

Recent research on equities has found that, in contrast to classical economic theory, the term-structure of stock returns is downward-sloping. Stocks with low cash-flow duration earn higher returns than longer-duration stocks.

The duration of equities is defined as the weighted average time to maturity of cash flows. It comes from summing up discounted cash flows and comparing them to price. Stocks with a lot of cash flow in the near term have low duration, while stocks with low cash flow now, but that have a lot of prospective cash flow in the future, have high duration.

Read the rest of the article on ETF.com.

 

We want to hear from you!

Montgomery

866.676.2701
info@jt-am.com
200 Commerce Street
Suite 300
Montgomery, AL 36104
Map

Dothan

334.793.7001
info@jt-am.com
304 Jamestown Boulevard
Dothan, AL 36301
Map

Receive Our Newsletter

Close