Question
Sophie is considering investing in company ABC Ltd. whose shares are currently trading on the market at a price of $5.60. ABC Ltd. has just
Sophie is considering investing in company ABC Ltd. whose shares are currently trading on the market at a price of $5.60. ABC Ltd. has just paid a dividend on $0.40 per share. The company has stated that they expect the dividend to grow at a rate of 3% per year. Sophie has a required rate of return for investing in this company of 11%.
- Give two examples of types of announcements companies are required to disclose to investors when listed on a stock exchange.
- Calculate the theoretical price of a share in XYZ Ltd.
- Given the current market price, would you recommend that Sophie invest in XYZ Ltd. based on your answer in part (b)? Explain why/why not.
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Economics
Authors: Paul A. Samuelson, William Nordhaus
19th edition
978-0073511290, 73511293, 978-0073344232, 73344230, 978-007351129
