On page 15 there is a topic EVIDENCE I have read the two pages more than 5 times and i still know what they are talking about? What evidence are they telling about?
Well as far as I understood it is just giving us a brief description assessing the historical return on equity to show the relationship between risk & return. It is more like giving a theoretical background on the two components of the cost of equity. Giving an evidence that the cost of equity has always been equal to the risk free rate plus the risk premium. Hope so I am right and this helps.
I think that reflects my reading of the two pages. Equities have been riskier than bonds, and have given a higher return (or a risk premium). Evidenced by historical research??! Not the most examinable part of the course, but I suppose you never know.
