Consider the following:

Robert Gillman, an equity research analyst at Gillman Advisors, believes in efficient markets. He has been following the mining industry for the past 10 years and needs to determine the constant growth rate that he should use while valuing Pan Asia Mining Co.

Robert has the following information available:

	Pan Asia Mining Co.s stock (Ticker: PAMC) is trading at $13.75.
	The companys stock is expected to pay a year-end dividend of $0.66 that is expected to grow at a certain rate.
	The stocks expected rate of return is 6.60%.

1. Based on the given information, what will be Robert's forecast of PAMC's growth rate?
2. Which of the following statements accurately describes the relationship between earnings and dividends when all other factors are held constant?
   1. all else being equal, growth in dividens requires growth in earnings
   2. long run earnings growht willl derease when firms retain earnings and reinvest them in the business
   3. retaining a higher percentage of earnings will result in a lower growth rate