Q1) Suppose an investor wishes to invest in a computer manufacturing firm whose main business is exporting computers. The firm has several rival companies that also export computers to the same market.

From the perspective of the investor, is the following a systematic risk or an unsystematic risk? How can an investor manage such risks when making investment decision? Explain your views.

1. The firm has a very high level of debt, and there are concerns that it may collapse in future if the business operation does not improve.
2. There are concerns that demand for computers is dropping in the target market. (4 marks)