Q#1:
a) What are the three components of Weighted Average Cost of Capital? Also write down the equation of weighted average cost of capital.
b) A company has a weighted average cost of capital (WACC) of 20%. What does it mean? (Simply interpret: what does 20% WACC for the company show in one or two lines).
Q#2:
a) What do you understand by Capital Asset Pricing Model (CAPM)? (Describe in minimum three lines and maximum six lines.)
b) Just list down in points the main criticisms that have been raised against CAPM.