Marc wants to invest in either LOP or ABC shares.He found out that last year LOP paid
Question:
Marc wants to invest in either LOP or ABC shares.He found out that last year LOP paid $0.50 in dividends while ABC paid dividends of $1.25 last year.LOP dividends is anticipated to grow at a rate of 5%.ABC however, is expected to have its dividends grow at a rate of 10% for years 1 & 2, then to a constant growth rate of 5% from thereafter until infinity.If LOP share price is currently $20 and ABC $30, what advise will you give Marc if he can only invest in one company with an expect rate of return of 7%?
Give a reason for your answer.
2)You are given the expected rate of return for two medical equipment:
Requirement:
a) Determine the standard deviation for the portfolio if 30% is invested in Equipment A and 70% in Equipment B.
b) Determine if this portfolio would be accepted if investments with a CV above 0.5 are rejected.
3)Kola Manufacturing has decided to raise funds by selling bonds $1,000 par value with a coupon interest rate of 5%. The bonds would mature in 9 years and interest would be paid annually. The required rate of return for similar bonds is expected to be 7%. What is the value of the bond?