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fix typo
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nchlswllms committed Jun 14, 2021
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\end{problem}

\begin{proof}[Solution]
The authors mention that the raw growth forecasts can be unrealistic due to bias. Since the dividend discount model depends sensitively on the growth forecasts, it is important to have good forecasts. The implied growth rates, which assume the asset is fairly priced, can help adjust the growth forecasts to more realistic value. Fore instance, the raw growth forecast for AT\&T in table 9.2 is -19.21\% and the implied growth rate, given in table 9.1, is 6.26\%. Using equation (9.22) results in a more modest AT\&T growth forecast of 2.21\%. Hence, the implied growth rates can be used to correct unrealistic growth forecasts.
The authors mention that the raw growth forecasts can be unrealistic due to bias. Since the dividend discount model depends sensitively on the growth forecasts, it is important to have good forecasts. The implied growth rates, which assume the asset is fairly priced, can help adjust the growth forecasts to more realistic value. For instance, the raw growth forecast for AT\&T in table 9.2 is -19.21\% and the implied growth rate, given in table 9.1, is 6.26\%. Using equation (9.22) results in a more modest AT\&T growth forecast of 2.21\%. Hence, the implied growth rates can be used to correct unrealistic growth forecasts.
\end{proof}

\begin{problem}{9.3}
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