On return rate implied by behavioural present value

TL;DR

This paper models the return rate of securities as a fuzzy probabilistic set influenced by behavioral factors, providing a new perspective on valuation uncertainty and identifying effective securities as a fuzzy set.

Contribution

It introduces a novel fuzzy probabilistic framework for return rates based on behavioral present value, linking subjective valuation to risk uncertainty.

Findings

Return rate modeled as fuzzy probabilistic set.

Properties of the fuzzy return rate analyzed.

Effective securities identified as a fuzzy set.

Abstract

The future value of a security is described as a random variable. Distribution of this random variable is the formal image of risk uncertainty. On the other side, any present value is defined as a value equivalent to the given future value. This equivalence relationship is a subjective. Thus follows, that present value is described as a fuzzy number, which is depend on the investor's susceptibility to behavioural factors. All above reasons imply, that return rate is given as a fuzzy probabilistic set. The basic properties of such image of return rate are studied. At the last the set of effective securities is distinguished as a fuzzy set.