2008 AM, Q5 A (i) question, expressed

lc26mizzou

My question -given that The Grinold-Kroner model can be expressed as:
E(Re) = (D/P -

chandsingh

I think you meant “2009 AM Q5”.
Anyway, the repurchase yield = -

sgupta0827

CFAI reading says the formula  is E(Re) = (D/P -

transferpricing

It is (D/P -

kasinkei

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, -

hardwork24

It’s the same thing

Analyze_This

Thats right -its the same thing , not  as  you explained
It is (D/P -

Micholien

negative repurchase yield means they are ADDING shares = expected return will be less, so you subtract it from the E(R)

FVPV

wizofoz

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 -