deletions | additions       diff --git a/section_textit_DDM_textit_RIM__.tex b/section_textit_DDM_textit_RIM__.tex  index 92bcede..20be70e 100644  --- a/section_textit_DDM_textit_RIM__.tex  +++ b/section_textit_DDM_textit_RIM__.tex 
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returns as long as the \textit{ROE} also increases. Moreover given two companies with the same  \textit{ROE} but different \textit{PB}s, the higher \textit{PB} will either have a lower discount rate $R$ and/or have  a higher persistence rate $\omega$ (ability to generate more abnormal earnings). There is a clear  similarity between the \textit{PB-ROE} model and the Gordon Growth Model (\textit{GGM}). Recall that the \textit{GGM} is :   \begin{equation}  \P_{t}=\frac{D_{t+1}}{(R-g}  \P_{t}=\frac{\ro E_{t+1}}{(R-g}  \end{equation}  The \textit{GGM} shows that the market value of equities is a trade-off between the discount rate and future  growth while the \textit{RIM} shows that the market value of equities is a trade-off between the  discount rate and the persistence rate. There is, thus, a close relationship between growth