标题: Repurchase yield for Grinold Kroner Model [打印本页] 作者: Chuckrox8 时间: 2011-7-13 16:11 标题: Repurchase yield for Grinold Kroner Model
Clearly, this is a very easy concept. If a company repurchases its shares there is a positive yield and the yield is added in the Grinold Kroner model. What makes it confusing is when the question doesn't explicitly say if the company buys or sells shares.
The income return portion of the equation is D/P - (change in S).
In the 2009 morning exam on question 5 it gives the change in S as -0.5.
According to the equation this would be D/P - (-0.5).
But of course the answer is the opposite. The repurchase yield lowered the income return in this case. How do you know when to add or subtract the repurchase yield?作者: bpdulog 时间: 2011-7-13 16:11
i just intuitively think if you're decreasing shares outstanding, it's usually seen as a good thing for share prices. so if they say decrease shrs outstanding or increase the repurchase yield, it's a positive # (minus a negative).
i hope the whole test is just one question after another- grinold kroner, taylor rule, repeat.
eat it singer terhaar. and your fancy ERP.作者: NakedPuts00 时间: 2011-7-13 16:11
I understand what you guys are saying, but sometimes it doesn't say whether the number of shares outstanding increased or decreased. It just gives change in S as -0.5. In that case, how do you know whether the equation should be either,
D/P - (-0.5)
or
D/P - (0.5)
Edited 1 time(s). Last edit at Thursday, June 2, 2011 at 05:49PM by bucky6225.作者: Analyze_This 时间: 2011-7-13 16:11
Hi. I took the negative repurchase as an increase to S作者: NakedPuts2011 时间: 2011-7-13 16:11
Bucky, I missed that one too when I did it and I just did not like it. If I see the same question verbatim in the AM come Saturday, I am going to do it exactly the way I did it. I will add the repurchase yield to the dividend yield. I have checked through the curriculum and stalla and they always added.
If everybody went the same way, they will be forced to give it to us or just throw it out. Unless it is explicitly stated that the company issued more shares, I will always add the repurchase yield.作者: lcw77 时间: 2011-7-13 16:11
if change in S is negative, less shares, good thing... all in it's a positive #.作者: former 时间: 2011-7-13 16:11
I'm with bucky6225 on this - these questions are always unclear. Concept simple - question unclear. Bad CFAI.作者: aidebaobao 时间: 2011-7-13 16:11
bucky6225 Wrote:
-------------------------------------------------------
> I understand what you guys are saying, but
> sometimes it doesn't say whether the number of
> shares outstanding increased or decreased. It
> just gives change in S as -0.5. In that case, how
> do you know whether the equation should be
> either,
>
> D/P - (-0.5)
>
> or
>
> D/P - (0.5)
If they give you change in S, you subtract it. If they give you repurchase yield, you add it.作者: mik82 时间: 2011-7-13 16:11
LobsterBoy Wrote:
-------------------------------------------------------
> bucky6225 Wrote:
> --------------------------------------------------
> -----
> > I understand what you guys are saying, but
> > sometimes it doesn't say whether the number of
> > shares outstanding increased or decreased. It
> > just gives change in S as -0.5. In that case,
> how
> > do you know whether the equation should be
> > either,
> >
> > D/P - (-0.5)
> >
> > or
> >
> > D/P - (0.5)
>
> If they give you change in S, you subtract it. If
> they give you repurchase yield, you add it.
Depending on the signs
NO EXCUSES作者: mp3bu 时间: 2011-7-13 16:11
Paraguay Wrote:
-------------------------------------------------------
> I think CFA already blew their trick on this too.
>
>
> Odds are not likely they will attempt the same
> thing again.
Knowing that candidates will be aware of the trick, they can use reverse psychology and just give us the actual change in shares.
NO EXCUSES作者: dyga 时间: 2011-7-13 16:11
2 bond hedge is not an LOS but I can see them asking questions about the process作者: justin88 时间: 2011-7-13 16:11
JP_RL_CFA Wrote:
-------------------------------------------------------
> 2 bond hedge is not an LOS but I can see them
> asking questions about the process
There was a large EOC on it though.作者: strikethree 时间: 2011-7-13 16:11
that's the whole point of my post. If you are supposed to subtract change in S, then you end up with
D/P - (change in S) --> 4 - -0.5
but the answer is
4 - 0.5 = 3.5
Edited 1 time(s). Last edit at Thursday, June 2, 2011 at 08:34PM by bucky6225.作者: Unforseen 时间: 2011-7-13 16:11
Dude, read the question. They gave you share repurchase yield.
