No. 1. (b) Write a note on CAPM. UNIT - II No. 2. (a) Compute the market value of the firm. Value of shares and the average cost of capital from the following information : Equity capitalization rate : (a) If the firm uses no debt 10%. (b) If the firm uses Rs. 2,50,000 debentures 11%. (c) If the firm uses Rs. 4,00,000 debentures 13%. Assume that Rs. 2,50,000 debentures can be raised at 6% rate of interest where-as Rs. 4,00,000 debentures can be raised at 7% rate of interest. OR