1. (a)Distinguish between debt and equity.
2. (b)Describe how you would price shares both in the situation in which the dividend stream is presumed to be constant and in the situation in which the dividend stream is presumed to grow at a constant rate.
3. (c)Explain the way in which risk may be minimised through the construction of a diversified portfolio. Make reference to both systematic and unsystematic risk, as well as to the way in which you may measure risk empirically.

(d) To what extent does the Efficient Market Hypothesis provide an adequate account of the way in which individuals price shares?