• a.In your own words, briefly discuss the general relationship between risk and expected return from an investors point of view. (7 marks)

• b.Provide a brief explanation of unsystematic risk and systematic risk. Under what circumstances is an investor likely to ignore the unsystematic risk? (7 marks)

• c.The stock of Pax has a beta value estimated to be 1.30. What does this beta value suggest? (7 marks)

• d.The following table displays information about the shares and bonds of PLAY, as well as the market. The percentage figures are annual. Estimate PLAYs weighted average cost of capital (WACC) assuming the company wants to raise capital using 60% of debt financing. Show your workings. (8 marks)

Risk-free rate	0.5%
	1.2
Expected market return	4.5%
Credit risk premium	2.5%
Tax rate	25%