Loring plc has paid the following dividends in recent years:

The dividend for 2009 has just been paid. The risk-free rate of return is 6 per cent and the market rate of return is 15 per cent.

(a) If Loring plc has an equity beta of 1.203, what will be the market price of one of its shares?

(b) Discuss the meaning of the term ‘equity beta’ and explain how the equity beta of a public limited company may be determined.

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Year 2005 2006 2007 2008 2009 Dividend per share 64p nil 7p 69p 75p