Question: Discussion Questions What is the difference between systematic and unsystematic risk? What type of risk is relevant for determining the expected return? What is the

Discussion Questions

What is the difference between systematic and unsystematic risk?

What type of risk is relevant for determining the expected return?

What is the SML? What is the CAPM?

Consider an asset with a beta of 1.2, a risk-free rate of 5% and a market return of 13%.

What is the reward-to-risk ratio in equilibrium?

What is the expected return on the asset?

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