▁share ▁is ▁stable ▁and ▁not ▁very ▁respons ive ▁to ▁changes ▁in ▁the ▁market . ▁Less ▁than ▁ 0 ▁means ▁that ▁a ▁share ▁is ▁moving ▁in ▁the ▁opposite ▁direction ▁from ▁the ▁rest ▁of ▁the ▁shares ▁in ▁the ▁same ▁market . ▁▁ 3 . ▁Equ ity ▁market ▁risk ▁prem ium : ▁The ▁return ▁on ▁invest ment ▁that ▁invest ors ▁require ▁above ▁the ▁risk ▁free ▁rate . ▁▁ ▁Dis count ▁rate ▁= ▁( ris k ▁free ▁rate ) ▁+ ▁beta ▁* ▁( equ ity ▁market ▁risk ▁prem ium ) ▁ ▁Dis count ▁factor ▁▁ ▁The ▁disc ount ▁factor , ▁D F ( T ), ▁is ▁the ▁factor ▁by ▁which ▁a ▁future ▁c ash ▁flow ▁must ▁be ▁multip lied ▁in ▁order ▁to ▁obtain ▁the ▁present ▁value . ▁For ▁a ▁zero - rate ▁( also ▁called ▁spot ▁rate ) ▁r , ▁taken ▁from ▁a ▁yield ▁curve , ▁and ▁a ▁time ▁to ▁c ash ▁flow ▁T ▁( in ▁years ), ▁the ▁disc ount ▁factor ▁is : ▁▁▁▁ ▁In ▁the ▁case ▁where ▁the ▁only ▁disc ount ▁rate ▁one ▁has ▁is ▁not ▁a ▁zero - rate ▁( ne ither ▁taken ▁from ▁a ▁zero - cou pon ▁bond ▁nor ▁converted ▁from ▁a ▁swap ▁rate ▁to ▁a ▁zero - rate ▁through ▁boot stra pping ) ▁but ▁an ▁ann ually - comp ounded ▁rate ▁( for ▁example ▁if ▁the ▁benchmark ▁is ▁a ▁US ▁Tre as ury ▁bond ▁with ▁annual ▁coup ons ) ▁and ▁one ▁only ▁has ▁its ▁yield ▁to ▁m atur ity , ▁one ▁would ▁use ▁an ▁ann ually - comp ounded ▁disc ount