FM Help on these 3 question, please.

1. A 8.3% redeemable loan note in ATV Co is due to mature in 3 years time at a premium of 14%, or convertible into 26 ordinary shares at that point. The current share price is $4.06, expected to grow at 11% per annum.

ATV pays corporation tax at a rate of 26%.

What is the current market value of the loan note if loan note holders require a 10% return?

2. Which of the following statements are true in relation to dividend valuation model.

– Cost of equity should be higher tha dividend growth
– Future dividend income discounted at cost of capital
– Difficult to calculate for unlisted company. difficult to estimate cost of equity
– DVM is same as market capitalisation
– There must be constant dividend payout ratio
– DVM takes into account of risk
– Assume dividend is known
– Assumes dividend growth is constant
– Is based on discounting past dividend income at cost of equity
– DVM does not take into of risk

3. Match the following statements with appropriate answers:

– WC Co announces that it decided yesterday to invest in a new project with a huge positive net present value.
Share price doubled yesterday.

– John doesn’t believe there is any value to be had in reading the first edition of the newspaper to help formulate an investment strategy for his share portfolio.

– Sarah decides to plot past share price movements to help spot patterns and create an investment strategy

– The majority of share price reaction to new news occurs when it is announced.

– Share price reaction occurs before announcements are made public.

– Attempting to trade on consistently repeating patterns is unlikely to work.

– Values shares according to the expected future cash flows and risk of a business.

– Teo decides to plot past share price movements to help spot patterns and make gains on regular basis. Teo believes the market is…..

– The lack of regulations on use of private information (insider dealing), is the evidence of

– Inability to consistently outperform the market by analysing latest public information, is the evidence of…

Using the points of:
A. Fundamental analysis

B. Random walk theory

C. Strong form of efficiency

D. Semi-strong or strong form efficient

E. A strong form efficient market

F. Completely inefficient

G. Technical analysis

H. Semi strong form of efficiency