An investor is holding 1,000 shares of Limited Company. Presently the rate of dividend being paid...

 

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An investor is holding 1,000 shares of Limited Company. Presently the rate of dividend being paid by company is 2 per share and the share is being sold at 25 per share in the market. However, several factors are likely to change during the course of the year as indicated below: [8 Marks] Risk free rate Market risk premium Beta value Expected growth rate Existing 15% 6% 1.60 6% Revised 17% 4% 1.75 8% In view of the above factors whether the investor should buy, hold or sell the shares? And why? An investor is holding 1,000 shares of Limited Company. Presently the rate of dividend being paid by company is 2 per share and the share is being sold at 25 per share in the market. However, several factors are likely to change during the course of the year as indicated below: [8 Marks] Risk free rate Market risk premium Beta value Expected growth rate Existing 15% 6% 1.60 6% Revised 17% 4% 1.75 8% In view of the above factors whether the investor should buy, hold or sell the shares? And why?