Q. 3: (a) What is the critical assumption inherent in the capital-asset pricing model (CAPM) as it relates to the acceptance criterion for risky investments? (b) Netsol Enterprises is financed by two sources of funds: bonds and common stock. The cost of capital for funds provided by bonds is ki, and ke is the cost of capital for equity funds. The capital structure consists of B dollars' worth of bonds and S dollars' worth of stock, where the amounts represent market values. Compute the overall weighted average of the cost of capital, ko. (c) What do you understand by initial public offerings (IPOs). What is the difference between the primary market and IPOs? Under what conditions an IPO is issued? What are the benefits derived by issuing IPOs? (d) Briefly explain in the context of IPOs: (i) information asymmetry hypothesis, (ii) ex-ante uncertainty hypothesis, and (iii) underwriter's prestige hypothesis