No -that is not what’s in the book-and not how it is explained in the Guideline Answer:
i. Income return is the sum of the dividend yield (i.e., D/P, which is 4.0%) and the equity
repurchase yield (i.e., the negative of the expected change in shares outstanding, -
Okay-let me just quote Grinold and Kroner (this is all on the CFA website, from their paper A Supply Model of the Equity Premium-link below)
E(Re) = (D/P -