^ Matt, i’m not sure about that. I think it’s just 4-.5 =3.5%. They were asking to break it down on a historical basis. Negative repurchase yield is subtracted.
mans Wrote: ------------------------------------------------------- > 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. But the question gave us the share repurchase yield, which is not the same as delta (S). If share repurchase yield is negative, it means they didn’t repurchase shares, they actually sold additional shares. So delta (S) is positive, so D/P - Delta S = 4 - .5
income yield = d/p + repurchase (which in this case is negative) nominal growth = g + inflation repricing = total - income yield - nominal growth
One thing I want to ask - did anyone multiply D/P by the real growth rate to get D1/P (because D/P was in ‘historical’ column)? I believe I’ve read somewhere that it should be “D1/P + repurchase yield (or deduct change in shares)”…
Question on this…I remember this question being 6 points…do you think they give 1-2 points for knowing the entire formula or not, or would it be just 2 points for each part.
jasonms Wrote: ------------------------------------------------------- > Question on this…I remember this question being > 6 points…do you think they give 1-2 points for > knowing the entire formula or not, or would it be > just 2 points for each part. It was six points. I’m guessing you would get zero points for putting the entire GK formula on the answer sheet. You would likely get 1 point on each of the component parts however if you simply wrote the respective formulas.
The whole question was 13 points, no? What was the other part?
it was part of a 19 point question…also had the Taylor Rule for 5 points and the 4 statements and the effect of long term growth
fyi, change in shares outstanding = negative (repurchase). for example, if we repurchase 10% of available stock out there, that means there is -10% shares outstanding. income return = d/p - %changeSharesOutstanding = d/p - (- %share repurchase )
dongjohnson Wrote: ------------------------------------------------------- > 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. Correct. I thought we had to only identify the components.
i’m pretty sure that the Q asked us to IDENTIFY the COMPONENTS. I don’t know why other ppl here CALCULATE the components… well, either ways, as long as we IDENTIFY the correct components, we’re good i guess.
i guarantee its d1/p. its in the text. not too sure about the repurchase, you may be right that its a subtraction
all i know here is that a positive repurchase yield increases return. so a negative one should decrease it. per schweser: “Note that when the change in stock outstanding is negative (i.e., stock is repurchased), this is to the investor’s benefit, and the repurchase yield is positive.”
I was so excited when i saw this question cause i actually knew the formula…spit it out on the page and then went back to read the question and i didn’t even know what they were asking…i just plugged the numder in and gave a them a return and then listed the components…i think i totally screwed this up
although i had some numbers in my answer, they asked for COMPONENTS so i really don’t think that numbers were necessary…
did it say, “no calculations necessary” i honestly don’t remember…and for the last one, i took the first two and subtraced from the 11.2 or 11.4 whatever it was, and backed into whatever i put for that one that way.
i dont think shweser broke the equation out like the CFA texts did - i just winged it like everyone will get part marks
I wrote down the formula but the components freaked me out. Hope I got at least one point.