(Please write 5 lines or so for each response)

1. (10 points) Suppose Moderna COVID vaccine is approved and it is announced today in the morning at 9AM. According to the efficient market hypothesis, should the price of Moderna stock adjust right away? Why? Under what conditions might it adjust slowly over time?
2. (10 points) Explain in your own words the meaning of systematic risk and unsystematic risk? Provide an example of each type of risk.
3. (20 points) Why is there is less unsystematic risk in a portfolio with many stocks- Explain why and how unsystematic risk gets diversified away?
4. (10 points) What is the typical annual volatility or standard deviation of annual returns (%) of a large capitalization stock (e.g., a Dow 30 stock)? How much of that total volatility can be attributed to the market and to unsystematic risk?