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1.5.1 Asset Values (Prices)

Asset values are computed using the discounted cash flow approach and the following inputs: 

Thus, we have

with   the price of asset  at time   the stream of future payouts, and  the discount rate for asset  at time .

Here,  is the combination of the term structure of risk-free rates in each period   until investment horizon  and the risk premia  estimated for asset .

As described here,  is a company specific risk-premia, computed as the combination of asset 's risk factor exposures at the time of valuation or  and the market price of each risk factor   estimated from observable market prices. 


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