Question 6 (10 marks, 2.5 marks each] (a) Shine Company sells industrial cleaners producing a revenue stream that has remained unchanged in the last few years. The company does not expect any change in its sales or earnings in the next several years. The share is currently selling at $25.88. If the required rate of return is 13%, what is the dividend paid by this company? (b) RTZ Ltd. has just paid a dividend of $4.45. The company has estimated a growth rate of 8% for the next several years. If the appropriate discount rate is 14%, what is the current price of this share? (c) Health Tech Ltd a biotech company has forecast the following growth rates for the next three years: Year 1: 30%, . Year 2: 25%, and . Year 3: 20%. After year 3, the company expects to grow at a constant rate of 7% indefinitely. The company paid a dividend of $2.00 recently. If the required rate of return is 16%, what is the market value of this share? (d) A mining company is issuing 20-year bonds that will pay coupons semi-annually. The coupon rate on this bond is 7.8% with a face value of $1,000. If the market rate for such bonds is 7%, what will the bonds sell for today? Question 5: [Total 15 marks; 5 marks for each part] The following table provides the share return forecasts and associated probabilities for X Coy. and Y Coy. Answer parts 'a' to 'c' using the information provided. Detailed worked solutions must be presented in your answers, including formulae used, progressive and final answers to the questions. X Coy Probability (%) 60 Return (%) 17.0 12.0 10.0 Y Coy. Return (%) 20.0 10.0 8.0 Probability (%) 30 20 50 20 20 (a) Calculate the expected return on each share. (b) Calculate the variance and standard deviation for each share. (c) Suppose a portfolio comprised of 70% investment in X Coy. and 30% investment in Y Coy. can be constructed. An analyst has estimated that the correlation coefficient of the two-asset portfolio is -0.30, calculate the return and standard deviation of this portfolio. Compare your answer with those reported in parts a. and b. and draw your conclusion