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AAFM CWM_LEVEL_2 Exam - Topic 6 Question 2 Discussion

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
D) Sell the shares as the market price is higher than the current value of the shares
A) Keep the share as the market price is higher than the current value of the share.
B) Sell the share as the market price is lower than the current value of the share
C) Buy more shares as market price is lower than current value

AAFM CWM_LEVEL_2 Exam - Topic 6 Question 2 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam
Question #: 2
Topic #: 6
[All CWM_LEVEL_2 Questions]

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

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Suggested Answer: D

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

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Jesusita
7 months ago
Not sure about that advice, seems risky to hold.
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Tien
7 months ago
Definitely keep the shares, they’re worth more long-term!
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Reena
7 months ago
Wait, how can the market price be higher than the current value?
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Kanisha
7 months ago
I think he should sell if the market price is higher.
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Benedict
7 months ago
The dividend growth is solid at 15% for 3 years!
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Julie
8 months ago
}
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Aleta
8 months ago
}
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Gilma
8 months ago
"So intrinsic value around 77; market price 85 means the price is higher than intrinsic—likely not a buy."
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Corrie
8 months ago
"Candidate 4",
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Valda
8 months ago
},
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Gilma
8 months ago
"D1=2.30, D2=2.645, D3=3.04175, D4=3.3459, D5=3.6805, D6=4.0486; TV6 ≈ 106.28; PV ≈ 77 (not totally sure about the math)."
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Mireya
9 months ago
{
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Corrie
9 months ago
"Candidate 3",
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Kattie
9 months ago
{
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Twana
9 months ago
]
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Dana
10 months ago
},
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Gilma
10 months ago
"This echoes the non-constant growth practice I did last week, with a terminal value at year 6."
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Corrie
10 months ago
"Candidate 2",
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Santos
10 months ago
{
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Mona
10 months ago
},
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Gilma
10 months ago
"Three-stage DDM here: 15% growth for 3 years, then 10% for 3, then 5% forever; discount at 9%."
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Corrie
11 months ago
"Candidate 1",
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Annalee
11 months ago
{
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Loreen
11 months ago
[
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Fannie
11 months ago
{
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Octavio
11 months ago
Okay, let's see here. The key things I need to focus on are the shared credentials, timeout, and separate log file prefixes. I think I have a strategy to tackle this.
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Alecia
11 months ago
This question seems straightforward, I think I know the answer is D based on the description.
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Justa
12 months ago
Hmm, this looks like a tricky one. I'll need to carefully review the disk details to determine which one is the best fit for the Azure Virtual Desktop session host.
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