SECTION A a) The financial manager's job is one that needs to be carried out very strategically. In class we discussed three important decisions that financial managers need to make. Briefly discuss what these decisions are and why they are most important. [3 marks] b) What is rational for determining the optimal capital structure for a corporation? What are the pros and cons for increasing levels of debt and equity in the capital structure that any financial manager needs to consider in arriving at this optimal capital structure? [3 marks] =) In class, we discussed the capital asset pricing model (CAPM) and the security market line (SML). Explain these concepts to a group of potential investors at the Science Department using the appropriate diagram? If a security's expected return versus risk is plotted above or below the SML what does this imply? [4 marks]