1. When analysing the cost of capital of a company, which of the following mixtures of costs and weights would be most accurate to use? a. Market weights, book costs b. Book costs, book weights c. Market costs, book weights d. Market weights, market costs

2. If irrational investors exuberance leads to an overvalued share price in the eyes of management and shareholders do not push for new unplanned investments, what would be the best way for management to act with regard to raising funds? Choose the best option from managements perspective. a. Raise equity finance while the share price is high. b. Wait for the share price to fall to raise funds. c. Issue bonds and use the proceeds for a share buy-back. d. Initiate a share buy-back.

3. Company Z is planning on acquiring company A through a share issue. The market price of company As shares is R10 while the market price per company Z share is R50. Company Z wishes to propose an exchange ratio of 0.3. What would the market premium offered by company Z be if it proceeds with this offer? a. 10% b. 30% c. 50% d. 500%