q1

(a) Assuming that the basic insurance and cash reserve needs are met, individuals can start a serious investment program with their savings. With the use of a diagram, assess the different stages of personal net worth over a life cycle. (15 marks) (b) Baby Inc., Bull Corp., and Dark Company will each pay a dividend of $2.35 next year. The growth rate in dividends for all three companies is 5%. The required return for each company's stock is 8%, 11% and 14% respectively. Calculate the stock price for each company, and comment on the relationship between the required return and the stock price. (10 marks) (25 Marks)