QUESTION TWO [20] 2.1 Dove Ltd pays 40% of its earning in dividends and its latest earnings announced. were R10 per share. The company expects to earn a return on equity (REC) of 20% per year in all reinvested earning forever. Dove's beta coefficient is 1.2, the risk free is 8% and the expected return on the market portfolio is 15%. Calculate the intrinsic value of Dove's share? (6) Consider the following expectation an Investment. 2.2 Probability 0.30 Economic conditions Boom Normal Recession Expected return 44% 14% 0.40 0.30 -16% Required: 2.2.1 Calculate the expected rate of return of this investment. 2.2.2 Estimate the overall risk (standard deviation) of this investment. (7) (7)