You own stock in the C&A Drug Company. You expect the following events to occur:

1. The government would announce that real GNP would have grown 1.2% during the previous quarter. The returns of C&A are positively related to real GNP.
2. The government would announce that inflation over the previous quarter was 3.7%. The returns of C&A are negatively related to inflation.
3. Interest rates would rise by 2.5%. The returns of C&A are negatively related to interest rates.
4. The president of the firm will announce her retirement. The retirement will be effective 6 months from the announcement day. The president is well liked and considered to be an asset to the company.
5. Research data will conclusively prove the efficacy of an experimental drug. Completion of efficacy testing means that the drug will be on the market soon.

Suppose the following events are the events that actually occurred:

1. The government announced that real GNP grew 2.3% during the previous quarter.
2. The government announced that inflation over the previous quarter was 3.7%.
3. Interest rates rose by 2.1%.
4. The president of the company died suddenly of a heart attack.
5. Research results in the efficacy testing were not as strong as expected. The drug must be tested for another six months and resubmitted to the regulatory authority.
6. Laboratory researchers had a break through with another drug.
7. A competitor announced that it will begin distribution and sale of a medicine that will compete directly with one of C&A's top selling products.

Required:

i) Discuss how each of the actual events above affects the returns on

your stock in C&A.

ii) For each event identify if it represents systematic or unsystematic risk.