1. Risk is usually measured in terms of the volatility in the historical returns generated by shares. Is this a good indicator of future risks in fast changing sectors? What implications does this have for the analysis of risk?
2. Explain briefly what beta (the relative risk) measures. Is this the only type of risk that a firm faces?
3. In the table below you have given returns for share X, share Y and the market

Year	Average annualreturns
	Share X	Share Y	Market return
1	12%	22%	15%
2	9%	8%	13%
3	7%	19%	14%
4	-1%	-10%	-9%
5	11%	20%	12%
6	4%	13%	9%

Required

Calculate the value of: total risk,relative risk and systematic risk for shares X and Y from the information given in the above table.

1. Calculate the required rate of return for each share assuming that the risk-free rate of return is 2.5% p.a. (based this on the CAPM methodology).