Grinold-Kroner P/E

CFA Level III
#1

In one of the Mocks or practice questions on CFA site, I believe the Grinold-Kroner formula was used incorrectly. Please correct me if I’m wrong.

In the problem, P/E changed from 15.6 to 15.0 and the example stated that the difference in P/E that was used in the formula was -0.6% (15-15.6)

I believe this is incorrect. The change in P/E should be (15 / 15.6) - 1 = -3.85%

Could someone please verify if I’m right or wrong?

#2

I believe it was this one but maybe it was a different question which was tricky – the historic PE was 15.6 and the anticpated PE in 10 years is 15

Therefore you have to annualize the 10year projected growth rate:

(15/15.6)^(0.10) - 1 = -0.39%

#3

If someone could locate this nightmare of a problem I’d be very interested in seeing the CFA answer.