Reference no: EM133069561

Question 1:

The table below provides stock market information for three different countries.

	Country A	Country B	Country C
Information asymmetry	Moderate	Low	Moderate
Transaction Cost	Moderate	Moderate	High
Number of market participants	Moderate	Moderate	Low

Using the knowledge you have obtained in this unit, explain which country you believe would have the largest and which country would have the smallest difference between market price and the intrinsic value of shares listed on their respective securities exchange?

Question 2: 

Explain the likely effects on dividend-payout ratios of each of the followings.

a) Interest rates decrease substantially;

b) Company profitability is negative;

c) Prospectus requirements are tightened, increasing the cost of share issues;

d) Personal income (but not capital gains) tax increases;