Question: 1. If inflation expectations increase, what would you expect to happen to the retums required by investors in bonds? What would happen to bond prices?

1. If inflation expectations increase, what would you expect to happen

1. If inflation expectations increase, what would you expect to happen to the retums required by investors in bonds? What would happen to bond prices? Explain your answer 2. Explain the difference between unsystematic and systematic risk, and give some examples of each type. Why can educated investors comfortably ignore unsystematic risks when constructing a portfolio?. 3. What does beta measure, and how does the CAPM model use this information to help us value securities? A biotech company is an extremely risky investment, since the results of a single clinicaltrial can sometimes cause the company to be very valuable or essentially worthless. Given this information, under CAPM would you expect a biotech company to have a low beta or a high beta? Explain

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