for a non-random dividend stream i.e. dt = d > 0 for all t. equilibrium asset price, in this case, is given by p = d /(1 )using the closed form of an infinite horizon geometric series. lim k ^k1*pt+k = 0

EXERCISE 4: (10 Marks) Again, given the the fundamental asset pricing equation pt=Etmt+1gt+1 2 Again, where mt+1=andgt+1=dt+1+pt+1 And defining the price dividend ratio vt:=pt/dt. Consider a growing, non-random dividend process dt+1=dt where 0