Question #7 (6+3+1 = 10 marks) Q7-a (a) Briefly discuss the difference between systematic risk, unsystematic risk and total risk and provide one example of each kind of risk. What kind of risk do you expect to dominate the risk of a diversified portfolio and why? 22. 66 HB i A X, X Q7-b (b) The risk-free rate is 4.0% and the market risk premium is 6.2%. If a share has a beta of 1.5 and an expected return on what is the reward-to-risk ratio? H- B 00 i A X X 22. 66 07-0 (c) In Part (b), what is the market's (market index or market portfolio's) reward-to-risk ratio? 12. SE 66 K HB i A. X X