In 2009 do we use historical because the rest of the data was historical?

What about the EOC? how did we know to use expectational and not historical? The question says calculate the “expected” is that enough to go on? i think not, as the 2009 question says “calculate the expected” also.

Determine , using the information in Exhibit 1 and the Grinold-Kroner model, the component sources of the historical nominal return for U.K. equities:"

btw , mcap11 is correct . the 2009 AM paper says and I quote here:

A. Determine, using the information in Exhibit 1 and the Grinold-Kroner model, the component sources of the _ historical _ nominal return for U.K. equities:

OOPS!! Big apologies guys, I framed the original question using 2009, but then when MCAP stated that the question said to use historical I went back and looked at a grinold Kroner question from 2007. - 2007 was open with one binder on my desk and 2009 was open on another. I mixed them up.

Thanks for setting me straight.

So sorry. You are correct. So we assume expectational unless asked to use historical.

I have a question here - why isn’t the repurchase yield positive? We have the equation as (- Del S) and here Del S is negative. So shouldn’t 0.5 be added instead of subtracted?

i have found it both ways in the text. i think the most consistent is if they give you repurchase yield is 1% then you subtract a negative 1 so thus the negatives cancel and add it to the model.