Suppose you are told that returns on Treasury Bills are currently at 5% and the market returns is 12%. The beta value for Cilly Bhd is 1.2. a) What is expected required rate of return on investment for Cilly Bhd? b) If Cilly Bhd is forecast to pay next year's dividends of RM 1.50 per share and that the annual dividend growth rate is 8% p.a., what is the expected share price of Cilly Bhd?
Suppose you are told that returns on Treasury Bills are currently at 5% and the market returns is 12%. The beta value for Cilly Bhd is 1.2. a) What is expected required rate of return on investment for Cilly Bhd? b) If Cilly Bhd is forecast to pay next year's dividends of RM 1.50 per share and that the annual dividend growth rate is 8% p.a., what is the expected share price of Cilly Bhd?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Suppose you are told that returns on Treasury Bills are
currently at 5% and the market returns is 12%. The beta
value for Cilly Bhd is 1.2.
a) What is expected required rate of return on investment
for Cilly Bhd?
b) If Cilly Bhd is forecast to pay next year's dividends of
RM 1.50 per share and that the annual dividend growth
rate is 8% p.a., what is the expected share price of Cilly
Bhd?
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