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Speculation-Based Asset Pricing

Author

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  • Lee, Woongki

    (Yonsei University)

Abstract

This study proposes speculation-based asset pricing, in which valuation is driven by speculative beliefs and return forecasts rather than by risk-based dividend discounting. This shift matters because the theory does not require a dividend stream and therefore applies to non-dividend-paying assets. The key object is a speculative baseline return, defined as the return level investors believe the asset can eventually deliver. This baseline determines the explosive growth rate of the bubble component, which identifies the speculative part of the asset price. The analysis then shows a dynamic implication: faster convergence to this growth potential requires a greater near-term return cost.

Suggested Citation

  • Lee, Woongki, 2026. "Speculation-Based Asset Pricing," SocArXiv 78s6z_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:78s6z_v1
    DOI: 10.31235/osf.io/78s6z_v1
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    References listed on IDEAS

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