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QUESTION 1 (25 MARKS) (a) Elaborate on business risk and financial risk. Suppose Firm A has greater business risk than Firm B. Therefore, Firm A should have a higher cost of equity capital. Justify. (9 marks) (b) Gigi considered constructing a portfolio for herself, discuss which school of thought would be practical for her portfolio, the Traditional or Modern Portfolio Theory. (10 marks) (c) Dividends are important, but at the same time, dividend policy is irrelevant. Justify. (6 marks)QUESTION 2 (25 MARKS) (a) Answer the following questions regarding Bean Bhd. (i) Bean Bhd has just announced an ordinary dividend per share of RM20. The past four years' dividends per share have been RM13, RM14, RM17 and RM18 (most recent dividend) and shareholders require a return of 14%. Calculate Bean Bhd share price. (6 marks) (ii) Bean Bhd now decides to increase its debt level, thereby increasing the financial risk associated with its equity shares. Bean's shareholders consequently increase their required rate of return to 15.4%. Calculate the new price of Bean's share. (4 marks)JAN 2023 ASSIGNMENT 2 (iii) Discuss the impact of using the dividend growth model as a way of valuing shares. (3 marks) (b) Elaborate the advantages and disadvantages of options and swaps contract to hedge interest rate risk. (12 marks)QUESTION 3 (25 MARKS) (a) Win Corp. is proposing a rights offering. Presently there are 650,000 shares outstanding at RM21 each. There will 40,000 new shares offered at RM15 each. Calculate the following: (i) New market value of the company. (3 marks) (ii) Numbers of rights that associated with one new shares. (2 marks) (iii) The ex-rights price. (2 marks) (iv) The value of a right. (2 marks) (v) Total flotation cost. Given the flotation cost is 7 percent. (4 marks)BBF304/03 CORPORATE FINANCE JAN 2023 ASSIGNMENT 2 (b) Elaborate any FOUR (4) defensive tactics used by firms to resist unfriendly attempts. (12 marks)QUESTION 4 (25 MARKS) (a) Select a company in any exchange that have merger or consolidated, then discuss the benefits of their combination. (10 marks) (b) Time Berhad is considering to invest (Foreign Direct Investment) in South Africa. Discuss any FIVE (5) factors that the company will consider when evaluating the political risk associated with South Africa. (15 marks)