Ques 1: Sheetal Industry's earnings and dividends have been growing at a rate of 24% per annum. This growth rate is continued for 3 years. After that the growth rate will fall to 16% for the next 5 years. Thereafter, the growth rate is expected to be 10% forever. If the last dividend per share

was Rs. 3.00 and the investors' required rate of return is 15%, what is the intrinsic value per share?

Ques 2: The returns of two assets under four possible states of nature are given below:

State of nature Probability Return on asset 1 Return on asset 2

1 0.30 1 0% 5%

2 0.10 12% 10%

3 0.20 15% 20%

4 0.40 16% 22%

(a) What is the standard deviation of the return on asset 1 and on asset 2?

(b) What is the covariance between the returns on assets 1 and 2?

(c) What is the coefficient of correlation between the returns on assets 1 and 2?