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An Elasticity Approach to Equity Risk Evaluation

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Abstract

This study defines and derives a measure of risk for real estate investment decisions using the concept of elasticity. Specifically, the elasticity of the after-tax equity yield with respect to the before-tax net operating cash flow growth rate is derived from a discounted cash flow equity valuation model. Also, an illustration of the use and interpretation of this elasticity measure is provided.

Suggested Citation

  • Larry J. Johnson & James L. Kuhle & Carl H. Walther, 1987. "An Elasticity Approach to Equity Risk Evaluation," Journal of Real Estate Research, American Real Estate Society, vol. 2(1), pages 41-49.
    • Handle: RePEc:jre:issued:v:2:n:1:1987:p:41-49
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    1. Frederick R. Macaulay, 1938. "Some Theoretical Problems Suggested by the Movements of Interest Rates, Bond Yields and Stock Prices in the United States since 1856," NBER Books, National Bureau of Economic Research, Inc, number maca38-1.
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    Cited by:

    1. Hassan, S.S. & Bullough, R.K. & Puri, R.R., 1990. "Atoms in fock state fields," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 163(2), pages 625-650.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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