Weighing up company profits

Article Abstract:

Stock markets have a number of functions such as redirecting capital toward high growth industries, as well as acting as voting machines on the popularity of stocks, and weighing profits, which are important over the long term. The British stock market has seen a rise in prices for companies attracting votes rather than those which are profitable, which may have led capital to be misdirected. Accounting conventions may mean that research is immediately wrtten off as a cost, though it is important for asset creation, and this can give different views of earnings, as is shown by the cases of Rolls-Royce and Psion.

Exchanges

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The hunt for the risk premium

Article Abstract:

Issues related to the equity risk premium and how it can be calculated are examined in detail.

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