Question: Question 1 a) Distinguish between systematic risk and unsystematic risk, and explain the significance of the distinction in portfolio analysis. (5 marks) b) Explain what

Question 1

a) Distinguish between systematic risk and unsystematic risk, and explain the significance of the distinction in portfolio analysis. (5 marks)

b) Explain what is meant by a shares beta value. (4 marks)

c) Outline the main practical problems in using the CAPM in capital investment decisions. (12 marks)

d) Discuss the assumption in CAPM analysis that corporate debt has a zero beta value. (4 marks)

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