Corporate Finance: Calculating Portfolio Weights, Dividend Policy and Share Price Performance

Running head: CORPORATE FINANCE
Corporate Finance
Name of the Student:
Name of the University:
Authors Note:

CORPORATE FINANCE
1
Table of Contents
1 Calculating the weights of different portfolios and detecting whether retrun holds CAPM
calculations:................................................................................................................................2
2.A Portraying the details of both the companies:.....................................................................4
2.B Stating dividend policy of both the companies:..................................................................5
2.C Evaluating and contrasting the dividend pay-out ratio of both companies:........................6
2.D Evaluating the changes in dividend policy of the companies:............................................7
2.E Evaluating and identifying the share price performance of the company after changes in
dividend policy:..........................................................................................................................8
Reference and Bibliography:......................................................................................................9

CORPORATE FINANCE
2
1 Calculating the weights of different portfolios and detecting whether retrun holds
CAPM calculations:
Particulars Value
Expected return 12.00%
Weight A (12%-17.1%) / (9.80%-17.10%)
Weight A 69.86%
Weight B 1 - 69.86%
Weight B 30.14%
Variance (69.86%^2*318) + (30.14%^2*269) + (2*69.86%*30.14%*80)
Variance 213.33
Stdev SQRT(213.33)
Stdev 14.61
Particulars Value
Expected return 12.00%
Weight A (12%-15%) / (9.80%-15%)
Weight A 57.69%
Weight M 1 - 57.69%
Weight M 42.31%
Variance (57.69%^2*318) + (42.31%^2*80) + (2*57.69%*42.31%*56)
Variance 147.50
Stdev SQRT(147.50)
Stdev 12.14