Question

While determining the normal rate of return for the valuation of shares in Market Value Method, which of the following should be taken into consideration?

• A. The degree of risk involved
• B. The current rate of interest on gilt-edged securities
• C. Weighted average cost of capital
• D. All of the above

Answer 1

The correct option is D All of the above

Determining normal rate of return for the valuation of shares in Market value method comprises of following:

• Risk involved in particular share or class of share in which amount is to be invested.
  
• Current market rate and trends in companies market value.
  
• Cost of capital of particular company so as to find the performance of company.