$r_s=$hat$(r{)}_s=\frac{D_1}{P_0}$ Expected $gL$

Investors expect to receive a dividend yield, $\frac{D_1}{P_0},$ plus a capital gain, $9$ g $,$ for a total expected return. In $,$ this expected return is also equal to the required return. It's easy to calculate the dividend yield; but continue in the future. However, we can use growth rates as projected by security analysts, who regularly forecast growth rates of earnings and dividends. is important and comes into play here, as is true for most decisions in finance.