REQUIREMENT A Pension fund has requested XY Mutual Funds to present an investment seminar to the staff and its members Razak, the senior vice presidents of XY Mutual Funds has asked your hemp to prepare the content for the presentation To illustrate the common stock valuation process, Razak has asked you to analyse ABC berhad, an IT solution company that supplies business analytics software You are to prepare the answer the following questions Explain how to value any stock, regardless of its dividend pattern If risk free rate is 4 and the market risk premium is 6 , what is the required rate of return on the firms stock, given that its beta coefficient is 1 2 If the company is a constant growth company whose last dividend (D 0 , which was paid yesterday) was RM 0 50 and whose dividend is expected to grow indefinitely at 5 What is the firms expected dividend stream over the next 3 years What is the firms current stock price What is the stocks expected value 1 year from now Assuming that the stock is currently selling at RM 6 20, what is the expected rate of return on the stock Now assume that the company is expected to experience supernormal growth of 50 percent for the next 2 years, thereafter return to its long run constant growth rate of 5 What is the stocks current value under these condit ions If the companys earnings and dividends are expected to decline by a constant percent per year, that is g 4 , why would anyone be willing to buy such a stock, and at what price should it sell Discuss the possible problems of using the dividend discounted method to value a stock and suggest an alternative approach to value the stock REQUIREMENT A Pension fund has requested XY Mutual Funds to present an investment seminar to the staff and its members Rarak, the settior vice presidents of XY Mutual Funds has asked your hemp to prepare the content for the presentation, To illustrate the common stock valuation process, Razak has asked you to analyse ABC berhad, an IT solution company that supplies business analytics software You are to prepare the answer the following questions 1 Explain how to value any stock, regardless of its dividend pattern be frisk free rae is 4 and the market risk premium is , what is the required rate of return on the firm's stock, given that its beta coefficient is 1 2 c If the company is a constant growth company whose last dividend (D, which was paid yesterday) was RM 0 50 and whose dividend is expected to grow indefinitely at 5 What is the firm's expected dividend stream over the next 3 year 1 What is the firm's current stock price What is the stock's expected value l'year from now Assuming that the stock is currently selling RM 6 20, what is the expected rate of return on the stock c Now assume that the company is expected to experience supernoemal growth of 50 percent for the next 2 years, thereafter return to its long ran constant growth rate of 5 What is the stock's current value under these conditions 1 If the company's earnings and dividends are expected to decline by a constant percent per year, that is g 4 , why would anyone be willing to buy such a stock and at what price should it sell Discuss the possible problems of using the dividend discounted method to vale a stock and suggest an alterative approach to value the stock (TOTAL 50) (GRAND TOTAL 100 MARKS)

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REQUIREMENT: A Pension fund has requested XY Mutual Funds to present an investment seminar to the staff and its members. Razak, the senior vice presidents

REQUIREMENT:

A Pension fund has requested XY Mutual Funds to present an investment seminar to the staff and its members. Razak, the senior vice presidents of XY Mutual Funds has asked your hemp to prepare the content for the presentation.

To illustrate the common stock valuation process, Razak has asked you to analyse ABC berhad, an IT solution company that supplies business analytics software. You are to prepare the answer the following questions:

Explain how to value any stock, regardless of its dividend pattern.
If risk-free rate is 4% and the market risk premium is 6%, what is the required rate ofreturn on the firms stock, given that its beta coefficient is 1.2?
If the company is a constant growth company whose last dividend (D0, which was paid yesterday) was RM 0.50 and whose dividend is expected to grow indefinitely at 5 %.
1. What is the firms expected dividend stream over the next 3 years?
2. What is the firms current stock price?
3. What is the stocks expected value 1 year from now?
Assuming that the stock is currently selling at RM 6.20, what is the expected rate of return on the stock?

Now assume that the company is expected to experience supernormal growth of 50 percent for the next 2 years, thereafter return to its long-run constant growth rate of 5%.What is the stocks current value under these conditions?
If the companys earnings and dividends are expected to decline by a constant percent peryear, that is g = -4%, why would anyone be willing to buy such a stock, and at what price should it sell?
Discuss the possible problems of using the dividend discounted method to value a stock and suggest an alternative approach to value the stock.

REQUIREMENT: A Pension fund has requested XY Mutual Funds to present an investment seminar to the staff and its members. Rarak, the settior vice presidents of XY Mutual Funds has asked your hemp to prepare the content for the presentation, To illustrate the common stock valuation process, Razak has asked you to analyse ABC berhad, an IT solution company that supplies business analytics software. You are to prepare the answer the following questions 1. Explain how to value any stock, regardless of its dividend pattern. be frisk-free rae is 4% and the market risk premium is , what is the required rate of return on the firm's stock, given that its beta coefficient is 1.2? c. If the company is a constant growth company whose last dividend (D, which was paid yesterday) was RM 0.50 and whose dividend is expected to grow indefinitely at 5% What is the firm's expected dividend stream over the next 3 year? 1. What is the firm's current stock price! . What is the stock's expected value l'year from now? Assuming that the stock is currently selling # RM 6.20, what is the expected rate of return on the stock c. Now assume that the company is expected to experience supernoemal growth of 50 percent for the next 2 years, thereafter return to its long-ran constant growth rate of 5% What is the stock's current value under these conditions 1. If the company's earnings and dividends are expected to decline by a constant percent per year, that is g -4%, why would anyone be willing to buy such a stock and at what price should it sell? Discuss the possible problems of using the dividend discounted method to vale a stock and suggest an alterative approach to value the stock (TOTAL: 50) (GRAND TOTAL:100 MARKS)