Question 2.1 Show by taking the appropriate derivatives that the price dividend ratio is a decreasing function of the interest rate R and an increasing function of the dividend grow th rate gd Question 2.2 Recall the graph for the price-earnings ratio from lecture slides (the Robert Shiller data) and assume that earnings are equal to dividends. Further assume that the real interest rate is constant at 7%. If the Gordon growth formulas is correct, what would the dividend growth rate have to be to explain the highest peak in the P/E ratio data that occurred around 2000 ? Similarly, what would the dividend growth rate have to be to explain the deepest through the P/E data that occurred in early 1920s? Question 2.3 Are the numbers you obtained plausible? What else could justify the fluctuations in the P / E ratio? Question 2.1 Show by taking the appropriate derivatives that the price dividend ratio is a decreasing function of the interest rate R and an increasing function of the dividend grow th rate gd Question 2.2 Recall the graph for the price-earnings ratio from lecture slides (the Robert Shiller data) and assume that earnings are equal to dividends. Further assume that the real interest rate is constant at 7%. If the Gordon growth formulas is correct, what would the dividend growth rate have to be to explain the highest peak in the P/E ratio data that occurred around 2000 ? Similarly, what would the dividend growth rate have to be to explain the deepest through the P/E data that occurred in early 1920s? Question 2.3 Are the numbers you obtained plausible? What else could justify the fluctuations in the P / E ratio