The Dividend$-$Discount Model offers a simple framework for understanding movements in the stock market. The equation associated with the Dividend$-$Discount model is the following:

$P_t=\frac{D_t(1+g)}{i-g}$

where $i$ is the risk$-$free rate $($rf$)$ plus the risk premium $($rp$).$

What does the dividend$-$discount model assume about the growth rate of dividends?

On August $15,2022$ the S&P $500($a stock$-$index measure$)$ began a two$-$month decline. Using the dividenddiscount model give two plausible reasons for the decline suggested by the following graphs. Refer to the empirical counterparts to the risk$-$free rate and the risk premium.

$5-$year Treasury Rate

High$-$yield spread $($BBB$-$AAA$)$