Example 18 (November 2005): Following information is available in respect of dividend, market price and market condition after one year. Market condition Probability Market Price Dividend per share Good 0.25 115 9 Hy 0 m Normal 0.50 107 5 Bad 0.25 97 The existing market price of an equity share is 106 (F.V. Re. 1), which is cum 10% bonus debenture of * 6 each, per share. M/s. X Finance Company Ltd. had offered the buy-back of debentures at face value. Find out the expected return and variability of returns of the equity shares. And also advise- Whether to accept buy back after? Solution: Example 18 (November 2005): Following information is available in respect of dividend, market price and market condition after one year. Market condition Probability Market Price Dividend per share Good 0.25 115 9 Hy 0 m Normal 0.50 107 5 Bad 0.25 97 The existing market price of an equity share is 106 (F.V. Re. 1), which is cum 10% bonus debenture of * 6 each, per share. M/s. X Finance Company Ltd. had offered the buy-back of debentures at face value. Find out the expected return and variability of returns of the equity shares. And also advise- Whether to accept buy back after? Solution