You have reviewed the characteristics and historical prices of two companies (A and B) that your company is considered to invest, and have estimated their relations to the wider market, detailed below:

Date	Share Price A	Share Price B
2019	$4.12	$22.96
2020	$5.36	$21.63
2021	$5.24	$26.72
2022	$5.65	$32.68
	Company A	Company B
Beta	0.8	1.6
Growth in dividends	5%	7%

Other information:

• Current risk-free rate of return: 5% p.a.
• Current return on market portfolio: 12% p.a.

REQUIRED:

a) Calculate the expected return and standard deviation for share A and B.

b) Calculate the required return for share A and B, given their risk characteristics.

c) Draw a graph of the security market line and, based on your answers above, plot the expected and required returns of shares A and B on the graph.

d) Describe what is meant by systematic risk and unsystematic risk. How is this distinction related to an investment's beta?