Required rate of return for gamma limited

Reference no: EM13145307

1. Gamma Ltd is not expecting to pay dividends for three years, at the end of year four, a dividend of $2.00 is planned and dividends are expected to be constant forever after that. The required rate of return for Gamma Ltd equity is 14% pa.

2. A debenture with a face value of $1,000 is selling for $966. The coupon is 10% pa paid semi-annually. What is the annual effective yield if the debenture has three years to maturity?

3. Polycorp wishes to make a one for four rights issue. The subscription price is $5.00. The current share price is $8.00. What is the theoretical ex-rights price? What is the value of a right?

Reference no: EM13145307

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