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ETP plc has ordinary shares in issue have a beta equity of 0.8. the current market rate of return is 9% and the risk free return is 3%. the company paid a dividend of 0.4cents. what is the market value of share.
ans is 512.8 cents i dont know how. the answer is not clear sir please help
My lectures on CAPM explain how to calculate the shareholders required rate of return (which is 7.8%)
My free lectures on the valuation of shares explain how to calculate the MV of a share, which is 0.4 / 0.078 = 512.78c
Please watch all of the lectures – I am certainly not going to type them all out here (and you certainly cannot prepare for the exam by attempting questions without studying first!).
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