Mid-year convention

The mid-year convention is a technical DCF adjustment that assumes cash flows arrive spread across the year rather than all at once on 31 December. Discounting them from the middle of the year instead of the end corrects a bias that would otherwise undervalue the company systematically. The effect is small but consistent, which is why it is standard practice in professional valuation.

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Definition for informational purposes. It is not financial advice nor a recommendation to buy or sell.