1) What is the main challenge of (especially) depository institutions in relation to the interest risk. Please explain.

2) I hold five stock in my portfolio: A, B, C, D and E. The portfolio beta is 1.80. Stock A comprises 25 percent of the dollar value of my holdings and has a beta of 1.0. If I sell all of my investment in A and invest the proceeds in the risk-free asset, what will be my new portfolio beta?

3) What is the expected risk-free rate of return if asset X, with a beta of 1.8, has an expected return of 25 percent, and the expected market return is 18 percent?

4) A financial asset has an expected return of 8% and the 3-month TBILL rate is 2%. When the standard deviation of the asset's excess return is 10%, what the Sharpe Ratio will be?