Ibbotson-Chen ERP: What the he** is this?

CFA Level II Equities
#1

Can somebody share his knowledge about the subject matter? What’s the most logical approach to remember this?

Thanks! smiley

#2

As I remember that horrible formula:

Risk premium = [(1+inflation)*(1+EPS growth)*(1+PE growth)-1+growth on index]-risk free rate

EPS growth can be estimated via GDP