1. Explain how a shareholder can, without knowing the future, diversify away the unsystematic risk of your company's stock potentially suffering a return that unexpectedly turns out to equal the expected return is 8.68% minus 77%.
2. What return do you expect on a portfolio next year that is currently invested 10% in your stock (with an expected return as 8.68% ) and 90% in an equity mutual fund (which is an investment company that invests into stocks for investors) that has a CAPM expected return of 5.82%?
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Answer rating: 100% (QA)

1 A shareholder can diversify away unsystematic risk of your companys stock by holding a diversified ... View the full answer