1.Discuss the nature of stock as an investment. Do most stockholders play large roles in the management of the firms in which they invest? Why or why not?

(25)

2. Compare and contrast the nature of cash flows stemming from an investment in stock with those coming from bonds.

(25)

3. Discuss why growth rate models are practical and convenient ways to look at stock valuation.

(25)

4. Describe the approach to valuing a stock expected to grow at more than one rate in the future. Can there be more than two rates? What two things have to be true of the last rate?

(25)

(TOTAL: 100 MARKS)

ASSIGNMENT SUBMISSION AND ASSESSMENT __________________________________________________________________________________ MANAGERIAL FINANCE JANUARY 2017 __________________________________________________________________________________ ASSIGNMENT QUESTION PURPOSE To evaluate the value of securities based on finance theories. REQUIREMENT Answer the following questions by using the relevant information given and corporate finance theories. QUESTION a. Discuss the nature of stock as an investment. Do most stockholders play large roles in the management of the firms in which they invest? Why or why not? (25) b. Compare and contrast the nature of cash flows stemming from an investment in stock with those coming from bonds. (25) c. Discuss why growth rate models are practical and convenient ways to look at stock valuation. (25) d. Describe the approach to valuing a stock expected to grow at more than one rate in the future. Can there be more than two rates? What two things have to be true of the last rate? (25) (TOTAL: 100 MARKS) Assignment Format: a. Each answer must contain 750-1250 words and must have introduction, body and conclusion. b. Use double space and 12-point of Times New Roman font. c. The assignment should contain about 3000 - 5000 words (15 - 20 pages) in total. d. Provide reference using the American Psychological Association (APA) format. e. References should be latest (year 2005 onwards)