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The current market prices of two stocks are given in the following table with a supplementary information of current dividend, dividend growth rate, and required
The current market prices of two stocks are given in the following table with a supplementary information of current dividend, dividend growth rate, and required rate of return. Stock Current price A RM30.00 B RM35.00 Current dividend Dividend growth rate RM0.50 6.0% RM1.20 5.5% Required rate of return 8.0% 9.0% a) Solve the value of each stock employing the dividend valuation model if the current yield of treasury bills is 4%. (4 marks) b) Translate the current valuation for each stock. (2 marks) c) Demonstrate the decision for each stock and the best valuable stock worth to invest in. (3 marks) d) Stock B is principally involved in manufacturing electric cables for domestic usage. In addition, its subsidiaries also hold various investments in conventional banking and stockbroking services with revenues generating RM5 million and RM12 million, respectively. The current cash placement in conventional banking amounts to RM55 million and conventional debt is RM105 million while total asset stands at 4 times greater than the annual revenues. If the annual revenue records RM60 million, justify the Shariah compliance of this stock based on Shariah Advisory Council (SAC) of Securities Commission screening rules. Show the calculation to support your argument. (7 marks) e) As the year 2020 ends, predict the risk and investment opportunities during 2021 within the Malaysian stock market. (4 marks)
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