1 - Why is it important to understand portfolio risk? What analytical tools help us understand risk in a portfolio?

2 - In previous chapters we learned about using various interest rates in finance. In Chapter 5, we used interest to discount future cash flow, in Chapter 7 we evaluated bond coupons and yield to maturity. Describe and contrast in a few sentences "expected return" on stocks to previous concepts regarding returns on investments. Also list the two components of stock return.

3 - What do we use the Capital Asset Pricing Model ("CAPM") for? What does it tell us?

4.Re Apple, Inc. -

Look up Apple's Beta. Using Apple's beta, and if the market return on all stocks is 10% and the risk free rate of return is 1%, what is the "expected return" for Apple using CAPM? Show your work.