Using the following information for Primex’s portfolios, answer question 5.1.1 and 5.1.2 that follow: Primex invested...

Using the following information for Primex’s portfolios, answer question 5.1.1 and 5.1.2 that follow: Primex invested R2 000 000 in a portfolio with the following characteristics: Description of share/bond Investment (R) Beta Retail R400 000 0.8 Industrial R500 000 1.5 Resources R686 000 1.8 Risk-free asset R414 000 0 The return on the market is 17% and the risk free rate is 8%. 5.1.1 Calculate the Beta for Primex’s portfolio. (6) 5.1.2 Calculate the expected return on Primex’s portfolio. (4) 5.2 Recently, ABC Company paid an annual dividend of R5.5 per share. The dividend per share is expected to grow at 10% per year for the next two years and then grow by 5% thereafter. Shares in other companies with a similar level of systematic risk to ABC yield 15% return on equity. What is the market value of ABC Company? (10)

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jeff jeffy answered 1 year ago

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