The concepts of risk, reward, supply and demand underlie the complexity of financial instruments. How could we use these concepts, for example, to explain the rate of return expected by a shareholder in Telstra and the price at which Telstra shares change hands on the stock market? (LO 1.1) Explain why an investor should consider the time-pattern of cash flows and the variability of the cash flows associated with a multi-period investment, rather than simply assessing the investment on the basis of the total cash flows received. (LO 1.1) During the GFC, the funding of longer-term assets with short-term borrowing was identified as a point of weakness in the operations of financial institutions. Discuss this statement with reference to the matching principle. (LO 1.4)