Q14 Security analysis question.

A) Describe the elements that need to be covered in a thorough industry analysis.

B) MF Corp. has a return on equity (ROE) of 16%, a retention ratio of 50% and a beta of 1.4. The consensus estimate of the coming years market return is 8% and T-bills offer a 3% return. If the coming years earnings are expected to be $2.5 per share, at what price will the stock sell according to the Dividend Discount Model (DDM)? What price do you expect MF shares to sell for in three years?

C) The use of DDMs by investors indicate that the higher the dividend payout ratio, the higher the stock price. Using a constant-growth DDM as a basis of reference, evaluate the statement.