AAFM Exam CWM_LEVEL_2 Topic 6 Question 2 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 2
Topic #: 6

Section C (4 Mark)

Read the senario and answer to the question.

Neeraj's portfolio consist shares of company X Ltd. which is paying a dividend of Rs. 2 per share. The dividend is expected to grow @15% annual rate for 3 years, then @10% for the next 3 years, after which it is expected to grow @5% forever. What among the following would be your advice to Neeraj in case the market value of the share is Rs. 85? Assume capitalization rate to be 9% per annum

AKeep the share as the market price is higher than the current value of the share.

BSell the share as the market price is lower than the current value of the share

CBuy more shares as market price is lower than current value

DSell the shares as the market price is higher than the current value of the shares

Show Suggested Answer

Suggested Answer: D

by Justine at May 04, 2022, 08:04 PM

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