3. What would the total shareholder return be on a share that currently is priced at £7.70 and has paid a
50p dividend during the year, if it was bought for £8 last year? What would the return have been if the
dividend was only 5p?
4. A share was bought for £3.40 exactly 11 months ago. It currently trades at price of £3.55 and has
already paid a dividend of 20p during the year. If no more dividends are planned, by how much more
(in pence) will the share price have to rise in the next month if it is to yield a total shareholder return of
25% over the 12 month period since it was purchased?
5.One way of easing the agency problem is to link earnings to corporate performance. Can you see any
problems with this solution?
6. Explain the main differences between:
a. Debt and Equity
b. Investment Decisions and Financing Decisions
c. The Primary market and the Secondary market
7. Company A is using child labour to produce goods. Its current suppliers have found out and are
refusing to supply them any longer. Company A has approached you and offered to pay twice the
market value for your materials. Would you supply them? Discuss.​