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Shares of stock traded in a stock market. Equities represent the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid.
5
votes
Modeling Long-Term Mean Reversion in Asset Returns
One economic model you could look at is the Habit model of Campbell and Cochrane (1999). The basic idea is that as the consumption of the representative investor approaches the (appropriately defined) …
0
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Does longer time horizon necessarily imply reduced risk?
If you define risk as volatility then here is something that might help, about 20 years ago there was much interest in "the random walk hypothesis", the idea that stock returns can be thought of like …