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is 10, given historical earnings growth patterns, what would be a reasonable estimate of long-run future expected rates of return on the stock market?...

If the P/E ration on the S&P 500 is 10, given historical earnings growth patterns, what would be a reasonable estimate of long-run future expected rates of return on the stock market? Assume a long-run inflation rate of 2.5% per annum.
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Finance-7590577.doc

Ans.
As per Ibbotson Associates, market return of return of S&P 500 is 10.3% per year compounded
since
1926. And also it can be derived from the formula of P/E Ratio
P/E Ratio = 1/Re
10 = 1/Re...

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