where I could find the formula? It is not on the formula sheet. Thanks.
is this on the test?
It’s depressing seeing something in a title of a thread and not having a clue what it is…
really…
{[(1+InflationRate)(1+RealEarningGrowthRate)(1+PEratio)-1]+DividendIncome} - RiskFreeRate It merely isolates the equity risk premium.
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its a fundamental model ={(1+inflation rate)(1+ growth in gdp)(1+growth in P/E) -1}+ reinvestment rate on dividends - risk free rate *there was a question in one of the vingettes i remember
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Not growth in GDP, i think it is growth in EPS. [(1+EINFL)*(1+EGEPS)*(1+EGP/E) - 1] + EGINC - risk free rate Where EGINC is expected growth in income, which can be dividends or coupons I believe.
growth in eps and growth in real gdp should be the same, and we assume they are. cfai text says if they are not then you adjusted real gdp.
I will attempt to remember this if I’m scoring 85+ on mock exams. Until then (maybe next year if I fail), I’ll use my braincells on easier fish to catch.
I won’t even bother with this one.
It is an EOC question so it is fair game on the exam, one would think
yeah, i had this question about a month ago too (because its an EOC). i’m going to ignore it - cant imagine more than one question. And if it does come up, i’m assuming one of the “wrong” answer choices will be like the CAPM calculation or something - so i will hopefully be able to eliminate bad choices…