A stock is trading at $70 per share. The stock is expected to have a year-end dividend of $2 per share (D1 = $2), and it is expected to grow at some constant rate gL throughout time. The stock's required rate of return is 11% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL? Round the answer to three decimal places.

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The constant growth rate of a stock g can be calculated using the Gordon Growth Model formu... View the full answer