1. Describe the systematic and nonsystematic risk components of the following assets:

A. A risk-free asset, such as a three-month Treasury bill B. The market portfolio, such as the S&P 500, with total risk of 20 percent 2. Consider two assets, A and B. Asset A has total risk of 30 percent, half of which is nonsystematic risk. Asset B has total risk of 17 percent, all of which is systematic risk. Which asset should have a higher expected rate of return?