1. What do we learn from observing the yield curve? What does today's US yield curve look like, and what does it's shape imply for expectations about inflation and the economy? 2. According to the capital asset pricing model (CAPM) the only risk that matters is market risk, captured by beta (B). What type of risk is this and what does it entail? Why are all other types of risk less important? Do you agree with the CAPM view on risk or not? 3. Suppose we live in a world where CAPM holds true. What is the optimal strategy for an investor who wants to builda portfolio that is riskier than the market? 4. S is an efficient portfolio with volatility of return equal to that of the market portfolio. What is the beta and the idiosyncratic volatility of portfolio S? 5. Why, as an investor, should you try to hold a diversified portfolio