Question: 1. Risk can be subdivided into systematic and unsystematic risk. Describe each type of risk, the related compensation for bearing that risk, and give some

1. Risk can be subdivided into systematic and unsystematic risk. Describe each type of risk, the related compensation for bearing that risk, and give some examples of each type. 2. According to the Capital Asset Pricing Model, the expected return on a risky asset depends on three components. Describe each component and explain how each is determined. [Ch 12] 3. Explain the relationship between the weighted average cost of capital (WACC), the maximization of firm value and financial decision making

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