Question: answer these questions: 1 . A diversified saver is likely to outbid an undiversified one. Why? 2 . Why is diversification less important in debt?

answer these questions: 1. A diversified saver is likely to outbid an undiversified one. Why?
2. Why is diversification less important in debt?
3. What does a sudden appreciation of stock prices after an IPO indicate
in terms of cost of capital paid by insiders?
4. A government bond whose tenure does not coincide with the project
tenure is not risk-free. Comment.
5. As an equity investor, will you charge more or less to a firm with a lot
of fixed costs compared to a firm with less fixed costs?
6. As an equity investor, will you charge more or less to a firm whose
fortunes are closely tied to the economy (so-called cyclical firms)
compared to defensives, say FMCG.

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