3. The following information is relevant for answering the questions that follow:

Risk-free rate of return = 8%

Expected return of the market portfolio = 12%

a. Find out the required rate of return of the common shares of Beximco Pharmaceutical Limited if the beta of the share is 1.3.

b. Given the risk-free rate of return and expected return of the market portfolio mentioned above, calculate the beta of a stock if its required rate of return is 18%.

4. A company has just paid Tk. 20 as common dividend. Dividends are paid annually. The dividends of the company are expected to grow at a constant rate of 8% per year forever.

a. Find out the dividends the company is expected to give in Year 2 and Year 4.

b. Find out the intrinsic value of the share of common stock of the company today if the required rate of return on the common stock is 15%.