You are in charge of the investment decisions of a universitys endowment. The endowment is diversified with 60% held in stocks and 40% bonds. The board of trustees of the universitys foundation is a group of individuals whose basis knowledge of modern investment theory and practice is superficial. They have sent a list of questions that they need clarification.

1. We have read the definitions of unsystematic, systematic, variance (standard deviation), covariance (correlation) and beta that you provided us. Specifically, how in practice are the these used in (relate to) the investment process? Make sure you address. Why have more than one risk measure? When is one more appropriate over the other?