Because we expect a positive return on a stock or index over a period of time to compensate us for holding the stock, we expect our fair value estimate, consider buy, and consider sell prices to to rise over time. The future fair value, consider buy, and consider sell prices are calculated by adjusting the future values to the expiration date, compounded by the annual rate of cost of equity, to the future values of dividend, also compounded by the annual rate of cost of equity.
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