Wednesday, November 23, 2011

vu experts - plz koi ye solv kr de

Assume that one year from now; you will deposit Rs. 1,000 into a saving account that pays 8%

interest. If the bank compounds interest semi-annually, how much will you have in your account

four years from now?

Question No: 17 ( Marks: 3 )

How much should you pay for the preferred stock of the PST Corporation, if it has Rs. 50 par

value, pays Rs. 20 a share in annual dividends, and your required rate of return is 15%.

Question No: 18 ( Marks: 3 )

What is a portfolio? Why an investor should invest his/her funds in a portfolio rather than in the

stocks of a single corporation.

Question No: 19 ( Marks: 3 )

What do you mean by yield to maturity (YTM) of a bond? Explain briefly.

Question No: 20 ( Marks: 3 )

Explain briefly the Constant Growth Dividends Model of common stocks valuation.

Question No: 21 ( Marks: 10 )

Snyder Computer Chips Inc. is experiencing a period of rapid growth. Earnings and dividends are

expected to grow at a rate of 15% during the next 2 years, at 13% in the third year, and at a

constant rate of 6% thereafter.

Snyder's last dividend was Rs. 1.15, and the required rate of return on the stock is 12%.

Required:

I. Calculate the expected dividends of the firm in the first three years.

II. Calculate the fair value per share of these stocks at the end of third year

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