The following attachment contains three questions. Answer them exhaustively for full reward.

13 Describe the risks associated with investing in debenture stocks. [5] 14 Explain why the directors of a company might wish to have a steady and consistent dividend policy. [5] 15 A company has several divisions, each of which operates on a geographical basis and in the same line of business. Divisional managers can submit proposals for capital investment projects for consideration by senior management at head office. An analysis of proposals received in the past three years indicates that some divisional managers submit far more proposals than others and that some divisional managers are consistently more optimistic than others in their proposals. Explain why such behaviour might occur and why it creates problems for companies. [5]