A new method for calculating long-run expected stock returns that firms can use to calculate their cost of capital. Firms whose perceived cost of capital is closer to the market-based cost of capital have higher market values.

How do changes in interest rates affect stock prices? It depends on why interest rates change. We identify "pure discount rate shocks" — movements in interest rates driven by neither changes in expected growth nor risk — which should be transmitted one-for-one into equity valuations. Pure discount rate shocks explain 80% of changes in equity valuations in G7 countries over the last 30 years.

Firms' nominal discount rates are sticky with respect to expected inflation. Sticky discount rates make firms' investment demand increase when inflation increases, leading to a distinct source of monetary non-neutrality. See costofcapital.org.

Firms' perceived cost of capital differs from expected returns in financial markets. The differences distort the allocation of capital and reduce TFP by 5% in a standard model. See costofcapital.org.

Green firms think their cost of capital is substantially lower than brown firms do. The difference incentivizes firms to invest in the green transition. See costofcapital.org.

Investors overestimate forward expected returns during market crashes. Such overestimation implies that stock markets drop more than they should during crises, explaining half the drop during the GFC and all of the drop during Covid-19.

New dataset on firms' perceived cost of capital and discount rates. Firms' discount rates do not move one-for-one with the perceived cost of capital, leading to time-varying discount rate wedges that account for low US investment in recent decades. See costofcapital.org.

New stylized facts about variation in higher-order moments of stock returns. They are inconsistent with leading disaster-based models and alter our understanding of tail risk.

Conventional wisdom on conditional risk is flawed: time variation in betas could explain all of the alpha to trading strategies — and in practice has a meaningful impact.

The public demands corporations to behave better within society. This big business discontent can influence public support for economic policies and cause firms' political communication to backfire.

We review the literature on the impact of COVID-19 on financial markets and argue that new asset pricing models are needed to account for the price fluctuations observed during the pandemic.

The major equity risk factors invest in short-duration firms and can be explained by models that produce premia on near-future cash flows. New data provide identification.

I study and reconcile time variation in the equity term structures of returns and yields, and introduce a new model to account for the facts.

Implied volatility from dividend derivatives can be used to estimate growth uncertainty, expected returns on dividend claims, and expected growth in real time.

Methods for understanding movements in stock prices and recovering growth expectations in real time. The stock market crash around the coronavirus outbreak was too severe to be justified by the drop in firms' expected earnings.

Two new factors separate competing theories for the low-risk effect: BAC is strong, consistent with leverage constraints; SMAX works too, consistent with lottery demand.