Question 1 Risk and Return (TOTAL: 25 MARKS) 1.1 Investors often use a method called the capital asset pricing method (CAPM) to measure the required rate of return. a) Define the capital asset pricing method (2 marks) b) Explain how CAPM is useful for measuring the required rate of return (5 marks) 1.2 Using an example, discuss how diversification of investments affects the riskiness and expected rate of return of a portfolio. (10 marks) 1.3 Explain how COVID-19 impacts the profitability, liquidity, and cash flow projections of businesses. (8 marks)