Question $3$

$($a$)$ Explain the different techniques which can be used for portfolio evaluation. For each technique explain two possible limitations$.$

$(7$ marks$)$

$($b$)($i$)$ Companies merge because of the so called $2+2=5$ effect $($synergy effects$).$ Critically evaluate this statement.

$(8$ marks$)$

$($ii$)$ Briefly discuss the techniques which a company can use to fight a hostile takeover.

$(6$ marks$)$

$($c$)$ Using an appropriate numerical example, distinguish fully between call and put options.

$(6$ marks$)$

$($d$)$ Explain the main characteristics of an opportunity set of risky assets.

$(3$ marks$)$

Total: $[30$ marks$]$