Question 2

a. Justify why Strategic Financial Managers should be interested in;

i. The expected cash flows from a security (3 marks)

ii. The required rate of return on a security. (3 marks)

b. Suppose you bought some stock for $25 per share. After one year, the price of the stock increased to $35 per share. During the year you received dividend of $2 per share.

i. What is the dividend yield?

ii. What is the capital gain yield?

iii. What is the total percentage return?

iv. If you initial investment was $1,000. How much did you have at the end of the one year?

v. Compute the total number of shares you have.

vi. As financial analyst, use strategic financial management skills to analyze the above