Fin621 Mid Term Current Paper (Dec 2010)

Fin621 Mid Term Current Paper (Dec 2010)

Question No. 1 Marks 3

What is the relationship between risk and return of an investment? 

Question No. 2 Marks 3
Why do firms compute weighted average cost of capital? 

Question No. 3 Marks 5
What (high or low) level of Debt Financing would you suggest for the following firms?
Firms paying high taxes
Firms paying no taxes 

Question No. 4 Marks 5
How capital rationing can be a hurdle to choose an optimal level of capital investment?
Discuss with reasons.