Question
CRB and MNB are two companies listed in the countrys stock exchange. In the end of 2015, the two companies paid a dividend of TZS
CRB and MNB are two companies listed in the countrys stock exchange. In the end of 2015, the two companies paid a dividend of TZS 350 per share. Both are anticipating that dividend shall grow at the rate of 8%. The beta of CRB and MNB are 0.95 and 1.42 respectively.
The yield on the countrys government bond is 7% and it is expected that stock market index shall increase at an annual rate of 13%.
Required:
Determine the value of share of both companies
Why there is a difference in the value of shares of the two companies
If current market price of share of CRB and MNB are TZS 7,400 and 5,500 respectively. As an investor, what course of action should be followed?
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
6th edition
9781305178045, 1285429648, 1305178041, 978-1285429649
