Considering the "Present Value of

Future Cash Flows" valuation model,

what explains lower returns of growth

stocks (vs. value stocks) in an

environment of rising interest rates?

.

Value stocks have greater uncertainty

of future cash flows

Growth stocks are discounted using a

lower required rate of return

A greater proportion of cash flows of

value stocks are front loaded (come in

earlier years) than growth stock! whose

cash flows come in later years.

. Inflation affects the margins of growth

stocks more than those or value stocks