In the live schweser mock exam a question asked what the required return on equity is from a data set that requires the use of Ibbotson Chen.

What I understand is that for an ERP calculation it is necessery to subtract the risk free rate as we are looking at the premium over RF. This is fine.

In this answer, they want you to use IC to figure out the required return and have done (1+inf) x (1+EPSg) x (1+PEg) -1 + Div Yield

There is no inclusion of RF as you only want to know the required return and not the ERP.

I thought with a required return calc you ADD the RF to your calculated return (such as in Fama French) - so why has this not been done for this question above?

i think that’s just the formula mate. to find ERP, we minus risk free, to find required return, we dont. so far from the mocks/tt’s seems like we just have to be able to apply the formula.