1. What is risk? (1 point) 2. According to the book and slides, what type of risk can be diversified away? (1 point) 3. What is CAPM? (1 point) 4. If the beta for a stock decreases from 0.99 to 0.65. The stock's 2 points) A. risk has increased. B. risk has decreased. C. sales bas increased. D. sales has decreased. E. Not enough information to answer the question. 5. Suppose you purchase 16 shares of Esme Corp stock for $25.22 per share on June 1st. On December 27 of the same year, you sold 12 shares of the stock for $32.68 per share. A. Calculate the holding-period dollar gain for the shares you sold, assuming no dividend was distributed. ( 2 points) B. Calculate the holding-period rate of return. (2 points) 6. Mashburn, Inc. is evaluating a security. Calculate the investment's expected return. (3 3 points) 7. Using CAPM, what is the required return for a stock with a beta of 1.3 ? The market returns 7%, and the risk-free rate is 2%. ( 3 points)