Reference no: EM133013860

QUESTIONS -

1. Assume the share price of Nedbank is R135. The company recently paid a dividend of R5.50 per share for the 2020 fiscal year. Expected return on equity is 15% and the company normally distributes 40% of its earnings. Find the required rate of return for the company's shareholders.

2. Suppose an investor is considering the purchase of a share of the Goldy Mining Company. The stock will pay a R10 dividend a year from today. This dividend is expected to grow at 5% for the foreseeable future. The risk-free rate of return is 6% and the company's beta is estimated at 1.25. You just noticed that return on the mining index is 9% What is the price of a share of Goldy Mining Company's stock?

3. If the price of Lowe's preference shares is R30 and the company pays a dividend of R2, what is the discount rate/required rate of return used by the company?

4. Miller Corporation has a premium bond making semi-annual payments. The bond pays a 9 percent coupon, has a discount rate of 7 percent, and has 8 years to maturity. I the bond's face value is R10,000,000, what is the price of this bond today?

5. A South African company has a bond outstanding that sells for 88 percent of its R100,000 par value. The bond has a coupon rate of 6 percent paid annually and matures in 20 years. What is the yield to maturity of this bond?