Saturday, 31 July 2010

The longer you have to wait and the less certain you are that you'll eventually receive a set of cash flows, the less they are worth to you today.


Is the firm in a cyclical industry (such as commodities or automobiles) or a stable industry (such as breakfast cereal or beer)? Because the cash flows of cyclical firms are much tougher to forecast than stable firms, their level of risk increases.

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