What does implied growth rate derive from in the conventional investment method?
Understand the Problem
The question is asking about the origins or factors that determine the implied growth rate in the context of conventional investment methods. This involves understanding financial metrics and investment analysis.
Answer
Market capitalisation rate (yield).
The implied growth rate in the conventional investment method is derived from the market capitalisation rate (yield).
Answer for screen readers
The implied growth rate in the conventional investment method is derived from the market capitalisation rate (yield).
More Information
In the conventional investment method, the implied growth rate is calculated by examining the market yield or the market capitalisation rate. This approach assumes that the growth of an investment is implicit in its yield.
Tips
A common mistake is confusing the implied growth rate with other growth forecasts or estimations derived from different financial models.
Sources
- Valuation - Investment Method Flashcards by Murdo McAndrew - brainscape.com
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