Abstract
Equity prices depend primarily on the underlying earnings of companies. More specifically, they depend on how the market currently values the expected future earnings stream of a company. Because most of the earnings of most companies are further out in the future and less certain than bond payments, returns on equities are generally much more volatile than those on investment-grade bonds.
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© 2015 Robert T. McGee
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McGee, R.T. (2015). Equities and Profits. In: Applied Financial Macroeconomics and Investment Strategy. Global Financial Markets Series. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137401809_5
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DOI: https://doi.org/10.1057/9781137401809_5
Publisher Name: Palgrave Macmillan, New York
Print ISBN: 978-1-349-49143-8
Online ISBN: 978-1-137-40180-9
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