Finance Answers

age Petal has paid annual dividends of R0,32, R0,48, and R0,60 a share over the past three years, respectively. The company now predicts that it will maintain a constant dividend since its business has levelled off and sales are expected to remain relatively flat. Given the lack of future growth, you will buy this stock only if you can earn at least a 16% rate of return. What is the maximum amount you are willing to pay for one share of this stock today?

Citing practical and quantitative illustrations, Discuss the concept of Security Market Index (10 marks)

Explain the effects of interest rates change and risk structure.

What do you infer from this statement “ The consumer is no longer required to make a choice

between price and quality, and competitiveness in quality is not only central to profitability,

but crucial to business survival”.

A finance company would like to engage in asset management within the firm. The firm measured its coefficient of absolute risk aversion A for all of its clients—the coefficients of absolute risk aversion range from -5 to 10. The client has to choose an investment to invest in, and the investments’ risks and returns are given in the table below.

Investment Expected Return, E(r) Standard Deviation,

A 0.12 0.30

B 0.15 0.50

C 0.21 0.16

D 0.25 0.21

a). All individuals have the utility function: U = E(r) – 1/2A*(Standard Deviation Squared). For all values in the absolute risk aversion range, identify which investment best suits an individual. Describe the results as ranges of the risk aversion parameter and present them in graphical form.

b). Based on the results in the analysis in a, what recommendations would you make to the CEO about the make-up of the company’s investments?

Mavis Taylor Corporation has just issued preferred stock. The stock has a 6% annual dividend and a $100 par

value and was sold at $98.5 per share. Flotation costs were an additional $3 per share.

a. Calculate the cost of the preferred stock.

b. If the firm sells the preferred stock with a 10% annual dividend and net $93.00 after flotation costs, what is its

cost?

name the two drivers of the market share of Islamic banking assets and elaborate on their effects and their driving role in the economic growth.

what do you know about global financial crises GFC 2007-2009. explain the reason of this global financial crises

B. The company just paid a $1.48 annual dividend and announced the plans to pay $1.54 next year. The dividend growth rate is expected to remain constant at the current level for the following 4 years and then settle at 3 percent per year. If you are planning to buy this stock in two years’ time, how much would you expect to pay for it if the required rate of return is 7 percent at the time of your purchase? (Use two decimal rounding)