Question: 1. Explain the difference between systematic risk and unsystematic risk (Support your explanation by examples). How does diversification affect them? What is the role of

1. Explain the difference between systematic risk and unsystematic risk (Support

1. Explain the difference between systematic risk and unsystematic risk (Support your explanation by examples). How does diversification affect them? What is the role of correlation on diversification? 2. Calculate the expected return and standard deviation for Stock A, Stock B, and a portfolio which consists of 30% of Stock A and 70% of Stock B. Return Probability 0.3 0.4 0.3 Stock A 15% 1096 -5 Stock B 0% 10% 20% Good Luck

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