News for hackers. Stuff that matters.
Re:U.S. Inflation Accelerates to 40-Year High by naveen99 on Thursday February 10, 2022 @11:57AM (#30289017)
Volatility adds a real time value of money on top of nominal interest rates.
Re:U.S. Inflation Accelerates to 40-Year High by 18nleung on Thursday February 10, 2022 @12:03PM (#30289140)
How does this work? (I thought volatility mainly affected the value of options, not the underlying cash flows?)
Re:U.S. Inflation Accelerates to 40-Year High by naveen99 on Wednesday February 16, 2022 @08:23AM (#30359606)
Options expire and decrease in value as time passes.
Re:U.S. Inflation Accelerates to 40-Year High by pramanat on Thursday February 10, 2022 @12:02PM (#30289117)
can someone explain this?
Re:U.S. Inflation Accelerates to 40-Year High by recursivedoubts on Thursday February 10, 2022 @12:05PM (#30289173)
A naive NPV calculation discounts a cash flow by a real discount rate:

https://www.investopedia.com/terms/n/npv.asp

when the discount rate is 0, the NPV is simply the sum of all payments in the series, so an infinite series of payments (e.g. rental income) is worth infinity

in reality, bad stuff happens: building burn down, renters leave, etc. so the right thing to do is to discount the payment stream by some risk function, particular far off payments