SECTION A SECTION B stion 3 Question 4 a. Discuss the primary motives for companies to go pubic. Stock 7 marks) 0.56 0.14 b. Critically evaluate the main reasons for IPO underpricing. 15% 17% 6% (13 mark Market Portfolio 1.00 Total 20 marks Question 5 1. Using the information above calculate the value for each stock (4 ly evaluate the trade-off theory with bankruptcy costs view that an optima capital structure exists. (20 marks If the expected return from the market portfolio is 11% and the risk free rate is 6%, calculate the required rate of return for each stock. 2. (6 marks Question 6 What would be the expected return and standard deviation of a portfolio with 50% of stock A and 50% of stock D, if the coefficient of correlation between the two shares is 0.75? 3. Critically discuss Miller and Modiglianis proposition on dividend irmelevance. (4 marks (20 marks) Discuss briefly the difference between beta as a measure of risk and variance as a measure of risk END 4. (6 marks (Total 20 marks