I have never been so lucky on an exam with this question… I had no idea what any of these components were. I ended up totally guessing i + g for nominal. Turns out this is right… Put delta(P/E) for last one with a contrived calculation, should get partial, and put D/P for first, perhaps partial again.
The question asked for HISTORICAL gk inputs. See CFAI Vol 3, bottom of page 35, discusses use of GK for historical purposes
This is the most annoying question for me out of all 3 levels I was writing. I’m so angry on it
i think many ppl fuked up this question and i left it blank… i dont want to miss the chacne of getting part marks but i just can’t think of what to write… FUKKKKKK
Div yield minus share repurchase did you guys do 4 + 0.5 or 4-0.5? i + g. Did you guys add the real wage growth and inflation to get 5.2 (bottom part of table) or use the “nominal wage growth” figure of I think 4.7 in the top part? I couldn’t figure out whether “nominal wage growth” was actually i + g. Totally stumped on change in PE
how did you come up with the change in P/E? i spent 10 minutes on this
I thought the question was asking you to identify the components, not to calculate. Maybe I am missing something here. Or maybe it’s just different region. I bs about changing P/E by saying that it can be derived from two of the components given. I don’t rememeber what they were though. However, I am pretty sure that you have to somehow derive it. Just not sure if what I was giving is correct.
^ I thought this as well.
L3BeatIt Wrote: ------------------------------------------------------- > They asked for the component sources, and that’s > what I put down… I did not try to CALCULATE > anything on this. was this wrong?? Same here. I didn’t calculate anything and just listed the component sources. Hmm…freaked out I didn’t calculate, which would’ve been simple since I had the sources right.
As far as I remember, there was an expected return given of about 11% or something, so I plugged in all values and reverse-calculated the %change in P/E. Don’t know if it was correct, but the best what I could think of. Another unanticipated question…
ptan54 Wrote: ------------------------------------------------------- > Div yield minus share repurchase > > did you guys do 4 + 0.5 or 4-0.5? > > i + g. Did you guys add the real wage growth and > inflation to get 5.2 (bottom part of table) or use > the “nominal wage growth” figure of I think 4.7 in > the top part? I couldn’t figure out whether > “nominal wage growth” was actually i + g. > > Totally stumped on change in PE You had to use the top table because the question specifically asked for the historical sources, which was the top table, and the bottom table was forward looking estimates.
Income 4+0.5 Growth something like 5.2 Total for Equity Return was given so used that to get Delta PE.
^^ yeah i did the same. I solved for the expected return and then backed out the income yield and growth rate to solve for P/E Repricing.
haha. i just guessed. i went with 15x was the expected one and hoped the guess worked. sometimes its about being lucky.
mans Wrote: ------------------------------------------------------- > Income 4+0.5 > > Growth something like 5.2 > > Total for Equity Return was given so used that to > get Delta PE. I think Income should be 4 - .5, because the share repurchase yield was negative, meaning the change in shares outstanding was positive.
yo cdog! how was the exam?
toohot! got rattled on q1 initially and i know i got the calculation for req return wrong. i felt like i recovered after that and had a fairly good morning session. Ethics in the PM was awful for me, but like others i thought the rest wasn’t too too bad. But, you never know, and i guess i’ll have to just try and stay calm until august. How bout you?
mans Wrote: ------------------------------------------------------- > Income 4+0.5 > > Growth something like 5.2 > > Total for Equity Return was given so used that to > get Delta PE. I think Income should be 4 - .5, because the share repurchase yield was negative, meaning the change in shares outstanding was positive. >> Yes it was negative. However equation is having D/P - Delta(S) So it make two negative positive.
it should be 4 - 0.5. It was in either the 2006 or 2007 AM exam that way.
income yield was 4*1.026 + 0.5 must adjust div yield forward and a negative repurchase yield is ultimately an addition as the formula is - deltaS