1. How does a change in corporate taxes change the firms value? Explain using the idea of levered (using debt) versus unlevered (not using debt) firms.
2. What is the difference between systematic risk and asset-specific risk and which of these risks is beta (b) measuring in the CAPM and why?
3. When valuing ownership in a business, explain one thing you can do as a potential investor to avoid problems of asymmetric information in each case (adverse selection and moral hazard).