QUESTION ONE Describe four possible sources of conflict of interest between shareholders and bondholders. Securities exchanges across the world play a critical role in the economic development of countries. In light of the above statement, summarise six roles of the Securities Exchange in the economic development of your country. (6 marks) Outline four characteristics of ordinary share capital as a source of business finance. The following data was extracted from the financial records of Faraja Ltd: (a) (b) (c) (d) Earnings before interest and tax (EBIT) Dividend payout ratio Number of outstanding ordinary shares Equity capitalisation rate Return on investment (ROI) Corporate tax rate Required: The value of Faraja Ltd.'s ordinary share using the Gordon model. Sh.400,000,000 40% 100,000,000 15% 12% 30% (4 marks) (4 marks) (6 marks) (Total: 20 marks)