Using Walter's Model for Analyzing the Relationship Between the Inflation Rate and The Stock's Fair Value
DOI:
https://doi.org/10.56294/sctconf20251493Keywords:
Walter's Model, Government spending, Inflation Rate, Stock's Fair Value, Iraqi Stock MarketAbstract
This paper uses the Walter model as the adopted framework to elucidate the correlation between the inflation rate and the fair value of shares of industrial businesses listed on the Iraqi Stock Exchange. The research used the Walter model to examine the correlation between the inflation rate and the equitable value of shares. The Capital Asset Pricing Model (CAPM) was used to calculate the rate of return necessary for determining the risk premium. The risk premium, one of the model's components, is determined by considering the beta factor, the return of the RM market portfolio, and the risk-free rate of return RF. The study focused on examining the significance of the risk premium in determining fair value. The rate of return needed is a fundamental element of it. Statistical analysis was performed to calculate the correlation coefficient and conduct simple and multiple regression analysis. This was done to assess the connection between the variables in the research. The investigation arrived at specific results and uncovered a clear association between the inflation rate and the fair value of equities. The paper presents an analysis of the influence of inflation on stock value and conducts a comparison examination of accounting methodologies for stock inflation. It assists market players in making portfolio choices by providing them with inflation information. Policymakers may use contractionary policy measures to diminish the money supply. The paper examines the influence of inflation on methodologies used to evaluate stocks.
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Copyright (c) 2025 Bushra Mohamed Sami Alasadi , Akeel Hamza Almagtome (Author)
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