S
Sean Cahill
Member
Hi all,
I noticed that the solution of q9.1 uses the following for the dividend yield and yield gap respectively:
Where am I going wrong here?
Thanks
I noticed that the solution of q9.1 uses the following for the dividend yield and yield gap respectively:
- d=r+ERP+g_div
- d-GRY=ERP-IRP-g_div-inflation expectations
- d+g=r+ERP + expected inflation [so inflation expectations are included on RHS of equation for total return vs being excluded above, and g has diff sign as that above]
- d-GRY=ERP-IRP-g [as inflation expectations cancel out between TR of bond and equity equations]
Where am I going wrong here?
Thanks