Home  Journals  Financial Analytics: Science and Experience  1(363) - 2023 January-March

A model for estimating the long-term return on shares

Received: 19 January 2023

Received in revised form: 28 January 2023

Accepted: 7 February 2023

Available online: 28 February 2023

Subject Heading: FINANCIAL INSTRUMENTS

JEL Classification: C51, E31, G12, G17

Pages: 4–15

https://doi.org/10.24891/fa.16.1.4

Subject. This article deals with the issues of dependence of stock yield estimates on the indicator based on the price-earnings ratio (P/E ratio) and expected inflation.
Objectives. The article aims to present an argument for the model of such a dependence and determine its parameters.
Methods. For the study, I used the stock value estimating and regression analysis methods.
Results. The article proposes a model for estimating the average stock yield based on the P/E ratio, and determines its parameters.
Conclusions and Relevance. The model helps quantify the impact of one of the important risk factors, namely, the expected inflation at the end of the shareholding period. The findings may complement the set of decision-making tools for investors in the stock market.

Keywords: stock market, price-earnings ratio, PER, inflation, stock yield, factors

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