The Grinold and Kroner model (GK model) is an equity market performance forecasting model. Thus, the model can be used to forecast the equity risk premium. They give you an expected return (or fair price) based on cash flows and expected growth. The advantage of DCF models is that they are forward-looking and. Grinold-Kroner Model. E(Re)≈ (D/P – ΔS) + (i+g) + ΔPE. E(Re) = Expected Rate of Return on Equity. D/P = Expected dividend yield. ΔS = the expected.

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CG is a market forecaster with IIM. Want to value equities using the Grinold and Kroner model in Excel? SS9 Asset Allocation 2. Topperharley Grinokd 8th, 3: This article needs additional citations for verification. MrSmart, you might be right on the deriving PE from divyield its not covered at all in the module info so its a real curveball if that IS what is required.


Earnings growth is the sum of real growth in earnings and the inflation rate.

Blackou Jun 8th, 4: December Learn how and when to remove this template message. Back to LOS 15c.

MrSmart Jun 8th, 5: No thanks, I don’t want to increase my probability of passing. Grinold and Kroner Model l.

Grinold and Kroner Model

Corrcet me if I’m worng. Under the Fed model, the earnings yield is compared to the year treasury bonds. We only have the historical gdinold of equity, which we should somehow use to derive the real rate or inflation from the remaining inputs.

The Gordon Growth Model assumes a constant long-term growth rate for earnings and dividends and looks like this: The results and the calculation are reported below. MrSmart Jun 8th, 4: What are Discounted Cash Flow Models?

I copied and pasted directly from my assignment. Skip to main content.

DCF Models (Gordon Growth and Grinold-Kroner) – My CFA Notes – Level III

What are the component parts of the Grinold-Kroner Grino,d Blackou Jun 8th, 1: We discussed the Grinold and Kroner equity risk premium model and its components. Current equity price-to-earnings ratio Next, the change in shares outstanding is subtracted.


Too many assumptions, the thing is, I could come up with several other methods, all with different answers. The Grinold and Kroner Model is used to calculate expected returns for a stockstock index or the market as whole. This question relates to Grinold-Kroner. SS11 Fixed Income 2. The whole problem here is finding historical inflation. Is there anything important that I should know for the exam?

Grinold-Kroner Model – CFA FRM GUIDE

From Wikipedia, the free encyclopedia. SS4 Private Wealth Management 1. These notes are not professionally-edited, or professionally anything, so please use them at your own risk. Be prepared with Kaplan Schweser. SS8 Asset Allocation 1. The best was to discuss the Grinold and Kroner model is by looking at the components. In the formula, it will look like this: However, I write stuff for AdaptPrep that is krone and may interest you.