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1. Distinguish between WACC, optimal capital structure, the equilibrium pricing model (CAPM), business risk, and financial risk. 2. Mention the different factors that must be

1. Distinguish between WACC, optimal capital structure, the equilibrium pricing model (CAPM), business risk, and financial risk.

2. Mention the different factors that must be considered when making decisions about the capital structure of the firm.

3. Why is risk coverage necessary? Mention and describe some instruments (contracts) that are used to hedge risks.

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