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Financial Markets and Institutions Assignment You are the chief financial officer (CFO) of Rich Man Company Inc. The company has performed well over the past
Financial Markets and Institutions Assignment You are the chief financial officer (CFO) of Rich Man Company Inc. The company has performed well over the past year. After setting aside money for dividends for the shareholders you have 10,000,000 Riyals in cash. You need to decide what to do with all the money you made. A meeting with the heads of the finance departments is called and you asked them for their recommendations. You tell them that although the current year has been good, you don't know how the next year is going to be. You also explain that according to the company's current expansion plans, you will need 1,000,000 Riyals every year for the next ten years. When you asked for their opinions everything goes crazy and as expected, they can't agree about anything. From their presentations, you understand that the current market conditions are as follows: 4 Stock market: The stock market has been doing well. The average growth in stock prices is at 10% year over year. The company's stock (RICH) is currently priced at 150 SAR and the dividends per share will be at 3 SAR by the next quarter. Your analysts expect that the average required rate of return for investors in the market is at 8%. The current dividend growth rate for your stock has been 5%. Bond market: The bond market is also doing well. The bonds that are mentioned in the presentations are the following three bonds that pay coupons annually: Financial Markets and Institutions Assignment You are the chief financial officer (CFO) of Rich Man Company Inc. The company has performed well over the past year. After setting aside money for dividends for the shareholders you have 10,000,000 Riyals in cash. You need to decide what to do with all the money you made. A meeting with the heads of the finance departments is called and you asked them for their recommendations. You tell them that although the current year has been good, you don't know how the next year is going to be. You also explain that according to the company's current expansion plans, you will need 1,000,000 Riyals every year for the next ten years. When you asked for their opinions everything goes crazy and as expected, they can't agree about anything. From their presentations, you understand that the current market conditions are as follows: 4 Stock market: The stock market has been doing well. The average growth in stock prices is at 10% year over year. The company's stock (RICH) is currently priced at 150 SAR and the dividends per share will be at 3 SAR by the next quarter. Your analysts expect that the average required rate of return for investors in the market is at 8%. The current dividend growth rate for your stock has been 5%. Bond market: The bond market is also doing well. The bonds that are mentioned in the presentations are the following three bonds that pay coupons annually
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