An ordinary share will pay its first dividend of $1 in two years. After that, the annual dividend is going to grow 9% per year for two years. Four years from today, the dividend growth rate is expected to become constant at 4% p.a. forever. The rate of return is 14% p.a. Use the dividend discount model, which of the following can be used to find the share price today?(There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.) (2 marks) Select one or more: 1 a. + 1.092 * (1.04) 1.09 1.092 0.14 - 0.04 + 1.142 1.143 1.144 1.144 b. None of the equation gives the correct answer. 1.092 1 1.09 0.14 0.04 + + 1.142 1.143 1.143 1.092 * (1.04) d. 1.09 1.092 0.14 - 0.04 + + 1.142 1.143 1.144 1.145 C. 1 + e. 1 1.09 + 1.142. 1.143 1.092 1.144 1.093 0.14 0.04 1.144 + f. 1 1.09 1.142 + 1.092 * (1.04) 0.14 - 0.04 1.144 1.092 1.143 + + 1.14 An ordinary share just paid a dividend of $2 today. It is expected that the share will pay annual dividends at a growth rate of 3% p.a. forever. George buys the share today for $25. He plans to sell the share in 12 months immediately after he gets the dividend. Which of the following can be used to find the rate of return for George (There is only one correct answer)? (2 marks) 2*(1.03)/25 2/25 2/25+0.03 none of the options can be used to find the rate of return. 2*(1.03)/25+0.03 Which of the following can be used to calculate the return on income for George during the 12 month holding period (There is only one correct answer)? (2 marks) 2*(1.03)/25 2/25+0.03 2*(1.03)/25+0.03 none of the options can be used to find the return on income. 2/25 An ordinary share just paid a dividend of $1.20. The share is expected to pay annual dividends growing at 3% p.a. forever. Use the dividend discount model (DDM). If the rate of return is 11% p.a., which of the following can be used to find the share price in three years (only one correct answer)? (2 marks) None of the options give the correct answer. 1.2*(1.03) 4/(0.11-0.03) 1.2*(1.03)^3/(0.11-0.03) 1.2*(1.11) 4/(0.11-0.03) 1.2* (1.11)^3/(0.11-0.03) 1.2/(0.11-0.03) The share price in three years should be . (Round your answer to 2 decimal places. Do not include the $ symbol. Do not use comma separators. E.g. 1234.56) (1 mark) A preference share is going to pay a dividend of $2 in one year. Use the dividend discount model (DDM), calculate the expected share price in three years if the rate of return is 7% p.a. (Round your answer to 2 decimal places. Do not include the $ symbol. Do not use comma separators. E.g. 1234.56) Answer: A company wants to raise $600,000 by issuing zero coupon bonds. The bonds have a face value of $1,000 and will mature in 8 years. The issue price gives potential investors a yield to maturity of 3% p.a. (nominal). Assume comparable-risk coupon bonds normally pay semi-annual coupons Calculate the issue price per bond. (Round your answer to 2 decimal places. Do not include the $ symbol. Do not use comma separators. E.g. 1234.56) (2 marks) How many bonds should the company issue to raise enough money? (Do not include unit. Do not use comma separators.) (1 mark)