How would proponents of the efficient markets hypothesis use the Gordon-Growth model to explain the movement of stock prices during the Financial Crisis of 2007-2009?

What will be an ideal response?

The decline in stock prices, though, may have been consistent with substantial changes in the expectations of investors with respect to both the future growth rate of dividends and the degree of risk involved in investing in stocks. The Gordon growth model indicates that an increase in rE and a decrease in g will cause a decline in stock prices.