A company has accumulated a significant amount of excess cash which is not required for investment for the foreseeable future.
It is currently on deposit, earning negligible returns.
The Board of Directors is considering returning this excess cash to shareholders using a share repurchase programme.
The majority of shareholders are individuals with small shareholdings.
Which THREE of the following are advantages of the company undertaking a share repurchase programme?

• A.The earnings per share should increase for the shareholders who do not sell their shares.
• B.Institutional investors generally prefer a constant predictable income in the form of dividends.
• C.It reduces the amount of cash for potential future investment opportunities.
• D.Individual shareholders can realise their investment if they wish.
• E.It reduces excess cash which might have been attractive to predators.

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The value of a call option will increase because of:

• A.An increase in the strike price.
• B.A decrease in the volatility of the share.
• C.An increase in the time to expiry.
• D.A decrease in the market value of the share

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A company's annual dividend has grown steadily at an annual rate of 3% for many years. It has a cost of equity of 11%. The share price is presently $64.38.
The company is about to announce its latest dividend, which is expected to be $5.00 per share.
The Board of Directors is considering an attractive investment opportunity that would have to be funded by reducing the dividend to $4.50 per share. The board expects the project to enable future dividends to grow by
5% every year and the cost of equity to remain unchanged.
Calculate the change in share price, assuming that the directors announce their intention to proceed with this investment opportunity.
Give your answer to 2 decimal places.
$ ?

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Two unlisted companies TTT and YYY are being valued. The companies have similar capital structures and risk profiles and operate in the same industry sector It is easier to value TTT than to value YYY because there have recently been several well-publicised private sales of TTT shares.
Relevant company data:

What is the best estimate of YYY's share price?

• A.$0.68
• B.$0.60
• C.$0.94
• D.$1.20

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CI IJ has decided to move its production plant to overseas country X.
This would make the product cheaper to produce.
The technology used to make the product is very advanced and some of the skilled staff would have to move to country X.
The Production Director has identified that there are some political risks in moving to county X.
For each of the political risks of moving to country X shown below, select the correct method for reducing the risk.

Correct Answer:

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