1. The systematic risk principle state that the expected return on an asset depend solely on the:
a. the risk associated with firm senior mana management
b. risk related to the operating system utilized by a firm
c. a non-diversifiable risk associated with that asset
d. Cyclical nature of the economy
e. Risks associated with the industry to which the asset belongs
2. Which one of the following is the best definition of the term "expected return" as it applies to the concept of risk and returns
a. the guaranteed return on a short-term treasury security which will be earned in the future
b. the difference between the expected return on a risky asset and the current return on a risk-free asset
c. the return on a risky asset which is expected in the future.
d. the certain return on a risk-free asset which is going to be earn in the future
e. the difference between the expected return on a risky asset and the expected rate of inflation