Question 6. Short Questions (a) Both the discounted dividend model and the Market-to-book ratio (MVE/BVE) are used to work out a fair value of a firm's shares. D. (1+8) P. -8 RequiredPlease identify, with some simple arithmetic and a short written explanation, how the discounted dividend model is linked to important financial variables which are the key influences on the value of the market-to-book ratio: (4 marks) Categories of Price/earnings ratio. Please briefly define each of the following: (1) Leading P/E ratio (1 mark) ( Trailing P/E ratio (1 mark) (1) P/E ratio (diluted) (two versions of this please!) (2 marks) (6) You have been asked to calculate the intrinsic value of the equity for Opal Ltd, a firm that is about to undertake an initial public offering (IPO) of its shares. The firm is in the business of making high-end tourist souvenirs from semi-precious stones. In particular, the method you have been asked to employ is that of finding an appropriate price/earnings ratio. However, there is only one listed firm in New Zealand that operates in this exact industry niche. Required: Ignoring the construction issues in part (b) above, please explain why estimating a P/E ratio may be difficult, how you would try to overcome these difficulties. (3 marks) (d) Please explain what A, B, C and D represent in the case of option valution of a project (that currently has a negative net present value) to produce a chemical with a twenty-year patent