1.Given the following notations for the risk-free and the risky assets: Rf return of risk-free asset Rp return of risky asset p standard deviation of returns of risky asset y portion allocated to the risky asset in a portfolio, C, of the risk-free and the risky asset Can the reward-to-volatility (Sharpe) ratio of any combination of the risky asset and the risk-free asset be different from that for the risky asset taken alone? Support your answer with detail mathematical steps using the above notations. What is the major factor affecting y in the portfolio, C, for different investors?

2.Although both investment and speculation aim at making positive return, explain which one will be more suitable for those approaching their retirement.

3.What does it mean by 'asset class' in investment? What are the most popular financial assets for long-term investment purpose?

4.Describe margin trading and short sales as securities trading strategies. What is the major difference between the two strategies in terms of price expectation?