Equity Valuation When Economic Indicator Is Tradable

With the development of economic in China, the Capital Market in China is developingstep by step, and the Equity Valuation problem is more and more important for us.In this paper we deal with the pricing of company stocks when the economic indica-tor(while this indicator can effect the income of the company) is tradable. Based on theequity valuation theory presented in a recently published book written by Professor SrdjanD. Stojanovic in [1], we introduce an economic indicator which is tradable, then get the stockprices in incomplete markets, and the effect of the tradable economic indicator is uncovered.In addition, the pricing formulas are obtained as special cases of the general methodology ofpricing.