Capm model and financial leverage beta , Financial Management

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1. Capital Asset Pricing Model and Multinational Corporations

Why do some critics say the CAPM model is not appropriate in an international setting? Please explain a way that the CAPM model could be adapted for international applications.

2-Initial Public Offers

Following the Initial Public Offering (IPO), the shares of Rosetta Stone, the language instruction company, jumped almost 44 percent from an initial price of $18 to $25.55 in late-morning trade on April 16, 2009. Please give two possible reasons that might explain the price jump on its initial day of trading on the New York Stock Exchange.

3-Financial Leverage and Beta

Please explain the effect of financial leverage on a firm's equity beta and cost of equity.

4- Capital Structure Theory

Please explain the trade-off theory of capital structure and how it differs from the Modigliani and Miller theorem with taxes.

5- Initial Public Offers

Renren, a social networking site similar to Facebook that claims 117 million active users in the Chima, had its IPO on May 4th 2011 and got listed on the New York Stock Exchange. Shares of Renren (RENN) were up 39% on their first day of trading.
Please give one possible reason that might explain the price jump on Renren's initial day of trading on the New York Stock Exchange


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