a. Assume you are a potential investor in Ghana and based on your analysis of the Ghanaian financial market, you are expecting interest rate to rise in the long term. How will this expectation affect:

i. Investors behaviour with respect to their choice for short or long-term assets.

(3 marks)

ii. The shape of the yield curve in Ghana today. (3 marks)

iii. Borrowers who plan to issue securities in the financial market. (4 marks)

b. Financial institutions are exposed to various types of risk. With practical examples, discuss any four types of investment risk that commercial banks are exposed to. (Your answer should not exceed 800 words)