Resource title

The Power Law and Dividend Yields

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Resource description

Recent research suggests that the power law is one of the most universal laws in nature and it also seems to work quite fine in economics and finance. In this paper we show that the power law explains extremely well the relationship between the value of broad-based market indices and their dividends. We also show that this relationship is consistent with declining relative risk aversion of the representative investor. Hence, the power law has a solid economic foundation.

Resource author

Erik Lüders, Inge Lüders-Amann, Michael Schröder

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/24060

Resource license

Adapt according to the presented license agreement and reference the original author.