Note that this stock is called a "Hold" as its forecasted intrinsic value is equal to its current price P0=rsgD1=0.10000.0300$1.03=$14.71 and the expected total return is equal to the required rate of return rs. If the market was more optimistic and the growth rate would be 5.00% rather than 3.00%, the stock's forecasted intrinsic value would be P0=0.10000.0500$1.03=$20.60, which is greater than $14.71. In this case, you would call the stock a "Buy". Suppose that the growth rate is expected to be 2.00%. In this case, the stock's forecasted intrinsic value would be its current price, and the stock would be a Step 2: Learn: Constant Growth Valuation