the output in the GK model is the risk premium right? so if I want to use that in the discounted cash flow method do I have to add the risk free rate to get the required return
no. grinold kroner is the expected return, don’t add risk free.
Thought I read that the Grinold Kroner also the equity risk premium? Can someone please provide some feedback?
It’s my understanding that the model spits out the return not the equity risk premium.
Looking at Schweser - page 90 Book 2 (Study Sesh 6, Reading 18)
Grinold Kroner produces the expected return on stock i
cool thank you