Question 1

The following information is given to you:

Treasury bill (risk free rate): 5%, Beta:1.2, Market return: 9%

Compute the required rate of return of the stock.

Question 2

If BAZ Holdings is expected to pay cash dividends of RM10 per share and the firm has a 11% required rate of return, what is the intrinsic value of the stock? If the current price is RM 93, what is your decision whether buy or not?

Question 3

Assume that company ABC pays a current dividend of 39 cents. The dividend is expected to grow at 5% per annum for an indefinite period.

(i) Find the intrinsic value of the stock given the required rate of return is 11%.

(ii) If the market price is RM 3.5, should you buy the stock or not? Why or why not?

Question 4

XYZ Company next year's dividend is expected to be RM1 per share, then dividends will increase annually by 7%, then 10%, then 12%, and then indefinitely increase by 5% after that. The required rate of return is 10 %.

(i) Calculate the current fair value of XYZ Company stock.

(ii) If the market price of the share is RM30, should you buy the stock or not?

Question 5

It is expected that RM 0 or no dividend will be paid for the upcoming first and second year for stock B. At year 3 and 4, dividend is estimated to be pay at RM 2. During year 5, the dividend will grow 6% forever. The required rate of return is 16%. What is the value of stock B?

Question 6

Briefly discuss the difference between private equity and venture capital

Question 7

Explain the difference between primary and secondary market.

Question 8

ABC Berhad is expected to earn RM 3.40 per share next year. The industry average P/E multiple is 8 times. Calculate the fair price of the stock.