1.CAPM: Describe the Capital Asset Pricing Model (CAPM) and what it tells us.

2.The Security market line: If the expected return on the market is 10 percent and the risk-free rate is 4 percent, what is the expected return for a stock with a beta equal to 1.5? What is the market risk premium?

3.Diversification: Describe how investing in more than one asset can reduce risk through diversification.

4.Systematic risk: Define systematic risk.