Believes in efficient markets


Problem:

A stock is trading at $76 per share. The stock is expected to have a year-end dividend of $4 per share (D1=$4), which is expected to grow at some constant rate g throughout time. The stock's required rate of return is 12%.

Required:

Question: If you are an analyst who believes in efficient markets, what is your forecast of g?

Note: Please provide full description.

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Accounting Basics: Believes in efficient markets
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