Question
Using information in the Table 4.1 below, calculate the expected return, variance and standard deviation of Primo share. (10) Table 4.1 Return of Primo share
Using information in the Table 4.1 below, calculate the expected return, variance and standard deviation of Primo share. (10) Table 4.1 Return of Primo share for various state of economy State of economy Probability of state Return for Primos share 1: Recession 0.3 -10% 2: Normal 0.4 10% 3: Boom 0.3 30% 4.2 Recently, ABC Company paid an annual dividend of R5.5 per share. The dividend per share is expected to grow at 10% per year for the next two years and then grow by 5% thereafter. Shares in other companies with a similar level of systematic risk to ABC yield 15% return on equity. What is the market value of ABC Company? (10)
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