Question No 01: Marks (10)

Organization ABC Stock is traded in the Lahore Stock Exchange and has a Market Price of Rs.13. The Company has fixed the Dividend to be Rs.2 per share. The Par Value of each offer is Rs.10. You expect the Price should be Rs.13 after 2 years. As the financial specialist, you expect a Minimum Required Return of 10% because you can earn that much from a bank deposit account almost risk-free. BUT, Stocks are generally more risky investments than bank deposits SO you will only invest in risky stock IF the expected return is higher than 10% - let's say 15%. Figure the estimation of Stock Value