Question One Briefly discuss the implications of the Efficient Market hypothesis for investment policy. (3 Marks) Question Two (a) Give a brief explanation on rights issue as a way of raising funds for a company.(1 Marks) (b) You have been presented with Data of the Right and Left Company Paid-up equity capital (1,000,000 shares of TZS 10 cach TZS 10,000,000 Retained earnings 20,000,000 EBIT 12,000,000 Interest 2,000,000 Profit before tax 10,000,000 Tax (50%) 5.000.000 EAIT 5,000,000 Earnings per share 5 Market price per share 40 Number of additional equity shares proposed 200.000 Proposed subscription price 20 Assume, an investor owning 1000 ordinary shares in the business, has received information of the forthcoming rights issue but cannot decide whether to take up the rights issue, sell the rights, or allow the rights offer to lapse. Required: i. Calculate the theoretical ex-rights price of an ordinary share in ABC Ltd (2 Marks) ii. Calculate the price at which the rights in Right and Left Company are likely to be traded. (2 Marks) iii. Evaluate each of the options available to the investor with 1000 ordinary shares. (1 Marks) Question Three (a) SJK Holdings has Tshs 100 million in equity and it has financed all its assets with 100% equity. The company had a net income of Tshs 20 million for the last year and it has a total of 10,000 shares. The company pays dividends at a rate of 40% of its earnings. Shareholders require 15% from their investment. Find (i) At what rate does the firm's equity growth (2Marks) (ii) Calculate the dividend per share of the company stock. (2 Marks) (iii) Calculate the value of the firm's stock. (2 Marks)