Question: Q2 a. ZF Ltd. has a security B 1.4, expected market return is 16%, risk free rate is 9%, Company's anticipated dividend for the

Q2 a. ZF Ltd. has a security B 1.4, expected market return is 16%, risk free rate is 9%, Company's anticipated dividend for the year is Rs.18, Current market price is Rs.450, and price is expected to reach at Rs.520 by the end of year. Calculate expected returns & estimated returns of security and explain valuation of stock. b. Explain Interest Rate Risk & Purchasing Power Risk

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a To calculate the expected returns of the security we can use the capital asset pricing model CAPM Expected return Riskfree rate Beta Expected market ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

EBIT is 22.000, taxes 34%, depreciation is 30.000. What is the operating cash flow? Anthony operates a part time auto repair service. He estimates that a new diagnostic computer system will result...

Read the following MCQs and rectify the errors: Question 1 Calco is a multi-divisional firm with a weighted cost of capital of 14 percent and a risk-adjusted discount rate for its can division of 17...

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

Correlli Ltd, a taxation category 2 company, has done some preliminary evaluation of the following four investment projects, as detailed below. Investment ______________ Investment cost _______ Rate...

A General information on the Lytax group of companies: Lytax Ltd is a company in the building construction industry. It has three regional offices, North Borders, Midlands and South Downs, which are...

Please read attached case study and answer questions 1-9 on page 4. Thanks. International Research Journal of Applied Finance ISSN 2229 - 6891 Vol. VII Issue - 3 March, 2016 Case Study Series Using...

Q1/ Selena invests the following sum of money in common stock having expected returns as follows: Common Stock Amount Invested in $ Expected Return Beta of Stock( ) WOOPS 5,000 0.14 0.6 KBOOM 10,000...

1.What is the solution for Mr. Bolden's issues (or questions) as stated in the first three paragraphs under the section titled Introduction? Substantiate with calculations 2.Establish the nature of...

Each team member is to become an expert on one depreciation method to facilitate teammates understanding of that method. Follow these procedures: a. Each team member is to select an area for...

On November 1, 2011, Columbo Corp. adopted a stock option plan that granted options to key executives to purchase 45,000 common shares. The options were granted on January 2, 2012, and were...

Show how to sort n integers in the range 0 to n2 - 1 in O (n) time.

Explain why the first ionization energy of Ca is greater than that of K, whereas the second ionization energy of Ca is lower than the second ionization energy of K. (Select all that apply.) When K...

The higher the interest rate, the higher the coupon will be on a bond when it is resold on the secondary market. the higher the coupon will be on a bond when it is first issued. the higher the price...

John Benson, age 40, is single. His Social Security number is 111-11-1111, and he resides at 150 Highway 51, Tangipahoa, LA 70465. John has a 5-year-old child, Kendra, who lives with her mother,...

Dr. George E. Beeper is a single taxpayer. He lives at 45 Mountain View Dr., Apt. 321, Spokane, WA 99210. Dr. Beepers Social Security number is 775-88-9531. Dr. Beeper works for the Pine Medical...

Dr. George E. Beeper is a single taxpayer. He lives at 45 Mountain View Dr., Apt. 321, Spokane, WA 99210. Dr. Beeper's Social Security number is 775-88-9531. Dr. Beeper works for the Pine Medical...

Chris Guthrie was recently hired by S & S Air, Inc., to assist the company with its short-term financial planning and to evaluate the companys performance. Chris graduated from college five years ago...

Chris Guthrie was recently hired by S&S Air, Inc., to assist the company with its financial planning and to evaluate the company's performance. Chris graduated from college five years ago with a...

1600150 Solve for the missing measurement: 5. If the volume of a cone is 2831.62cm^(3), and the height is 16 what is the radius? 13

Q2 a. ZF Ltd. has a security [3 1.4, expected market return is 16%, risk free rate is 9%, Company's anticipated dividend for the year is R318, Current market price is R5450, and price is expected to...

ZF Ltd is in the corn business. The company plans to sell 100 metric tonnes of corn in a year. The current price of corn is $202 per metric tonne. The company can enter into a short position in the...

Indla Construction Industry fackground to the company de corridays an important growth of India's economy is wrw of the Interlinduntries in India. It has been dort and lacturing and Industrial growth...

Please help me to solve below attached questions of taxation and consolidation....it would be great if you provide solutions Q1 ShouldBeMyOwnWork Ltd had the following balances in their books showing...