1. Ron is concerned about risk, and he would appreciate your help in better understanding it.

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Pulp	Fiction	Portfolio Pulp-Fiction
Boom	0.40	35.50%	22.40%	31.51%
Normal	0.35	10.30%	8.50%	9.16%
Recession	0.25	-12.70%	-4.20%	-10.15%

1. 1. Define systematic risk (1-2 sentences).
2. 2. Define unsystematic risk (1-2 sentences).
3. 3. Considering the three states of the economy, calculate standard deviation for Rons Pulp-Fiction portfolio above.
4. 4. Is there anything Ron can do to decrease systematic risk? (1-2 sentences)

5. Is there anything Ron can do to decrease unsystematic risk? (1-2 sentences)