1. What is the relationship between forward rates and the market's expectation of future short rates? Explain in the context of both the expectations theory of the term structure of interest rates.
2. What is the difference in cash flow between short-selling an asset and enter a short futures position?

Question 3

What sorts of factors might limit the ability of rational investors to take advantage of any "pricing errors" that result from the actions of "behavioural investors"?

Question 4

What is another name for unsystematic risk and why does it have that name?

Question 5

What are the investment proportions in the minimum-variance portfolio of the two risky funds, and what is the expected value and standard deviation of its rate of return?