CFAI L2 Mock question 34 from pm

[heshoos]

question 34 from pm asks to calculate the implied long term growth rate.
Does any one know why we dont use the formula r=div yield + growth rate to calculate the growth rate, the exhibits give the div yield and required return and yet the answer illustrates the use of div yield= r-g/1+g… Im confused!!
and what is everyone scoring btw on the mock???

 

[bfry]

I don’t know the whole question but (r-g/1+g) is the justified dividend yield based on fundamentals. If you do some algebra from the GGM you will see this is accurate.