Section B (2 Mark)
Which of the following statements with respect to International Taxation Structure is/are correct?

Section C (4 Mark)
You are considering adding a new product to your firm's existing product line. It should cause a 15 percent increase in your profit margin (i.e., new PM = old PM x 1.15), but it will also require a 50 percent increase in total assets (i.e., new TA = old TA x 1.5). You expect to finance this asset growth entirely by debt. If the following ratios were computed before the change, what will be the new ROE if the new product is added and sales remain constant?

Section C (4 Mark)
As an investor you have a required rate of return of 14 percent for investments in risky stocks. You have to analyze three risky firms and must decide which (if any) to purchase. Your information is

What is the maximum price? Which (if any) should buy?

Section B (2 Mark)
____________ are good examples of the limits to arbitrage because they show that the law of one price is violated.

Section A (1 Mark)
A(n) _________________________ combines a normal debt instrument with a credit option. It allows the issuer of the debt instrument to lower its loan repayments if some significant factor changes.