Commonly used jargon in financial markets, such as beta and alpha, originate from asset pricing models.

1. Describe,  the role played by alpha in an asset pricing model. (Worth 1 mark)
2. Explain, the impact on the beta and unsystematic risk of a risky asset portfolio when more assets are added to the portfolio. (Worth 2 marks)
3. Explain, how you can use the single index model when deciding on whether to buy or sell shares in CSL Limited. (Worth 2 marks)