1.Please explain the risk vs. expected rate of return tradeoff, the security market line, and determination of beta on this basis. Include explanation of all theconstituents namely, security market line,risk measure, expected rate of return, risk-free rate of return, and market rate of return. Include hypotheticalexamplesfor better clarity.

2.Explain the weighted average cost of capital (WACC) and its significanceand include hypotheticalexamplesfor better clarity.