boe speech, 2024-02-12
These staff estimates are based on (1) a capital asset pricing model, which estimates the cost of equity based on the estimated sensitivity of bank equities' daily excess returns to market-wide excess returns, market-wide equity risk premia, and a measure of risk-free rates; and (2) a dividend discount model, which models banks' equity prices at a given point in time as the sum of all expected future dividends (based on analyst expectations where available, grown forward in line with long-run nominal GDP growth forecasts) discounted by the implied cost of equity.
Sentiment: neutral
Topic: mp_interest_rate