Submitted by: Submitted by srigopal
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Words: 774
Pages: 4
Category: Business and Industry
Date Submitted: 05/11/2012 04:13 AM
AEREN FOUNDATION’S Maharashtra Govt. Reg. No.: F-11724
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Financial Management
1 (a) R f = 7% R m = 16%
| | |Prop |Beta | CAPM = Ke = |Expected Return |
| | | | |Rf+B(Rm-Rf) | |
| | | | |=7%+0.9(16%-7%) | |
|A |12,00,000 |0.727 |0.9 |15.10% |10.98 |
|B |3,50,000 |0.212 |1.5 |20.5% |4.346 |
|C |1,00000 |0.061 |1.0 |16.00% |.976 |
| |16,50,000 |1.000 | | | |
Return of equity ( CAPM) = Rf+B* (Rm-Rf)
=7%+0.9(16-7%)
B) Given :
|Share |Selling Price |Expected Dividend |Expected Market Price |
|A |Rs 60 |Rs. 4 Per Share |Rs 70 |
( a ) Rate of return on investment in shares
R = [ D1+ (P1-P0) ] / P0 = (Rs 4 + (70-60)/60
= 4+10/60
= 14/60 = 0.233 = 23.33%
( b) Dividend yield = D1/Po = Rs 4/60
= 0.066 = 6.6%
( c) Capital Gain Yield = (P1-P0)/P0 = (70-60)/60
= 10/60 = 0.166...