infinitybenzo

p182, Q1C, it says fed model limitation is compare norminal and real, so what is norminal? E/P of stock market or T-bond yield? I think both are real, how about you?

francis , do you understand what "real" means ? It does not mean someone made it up.

It just means its not adjusted for inflation. When you get an S&P yield it is a ratio of two co-temporal terms i.e. earnings and index level so inflation does not figure into it ( numerator and denominator effects cancel), i.e. it is real.

But T-note yield does not take into account the inflation effect , it is nominal