1. For your Company 1, conduct some market research to find out what has been happening to your stock for the last 5 years. Based on what we learnt, there must be two primary sources which cause the prices of your stock to plunge (i.e. decline) at certain times; Unsystematic risk and Systematic risk. Highlight two specific down periods where one is caused by unsystematic risk and the other by systematic risk. [11 marks] For each, discuss the real-event in detail and how it affected the company performance on the day (or over the days) by referring to price changes (You can have a look at daily price changes in Yahoo by following 1.e. in Part I and changing the option to 'Daily'). Clearly discuss through what channels company performance would have been affected. For each, discuss how S&P/ASX200 responded on the same day (or over the days) by referring to value changes. Discuss your findings with reference to the impact of unsystematic and systematic risks. If your answer contains plagiarised materials, no marks will be given. 2. Suppose that you have an option of investing in one single asset; the first stock or the second stock. Which stock would expose you to greater total risk? [2 marks] 3. Which asset, your first stock or your second stock, would require a higher risk premium and why? [3 marks) 4. Suppose that you consider forming a four-asset portfolio by investing 20% of your wealth in your first stock, 20% in your second stock, 40% in S&P/ASX200 and 20% in the 10 year Australian government bonds. Compute the beta of your portfolio and interpret the value. [4 marks)