1. a. Why rising interest rates would decrease the Net

worth of a bank operating under normal conditions

(going concern). How would it affect the Net worth of a

bank under liquidation? (10%)

b. Can a portfolio manager guarantee the capital of his client

investing in a stock market over say a five year period and

generate some return, irrespective of the performance of

the stock market over this period ? Explain how? (10%)

c. How can a bank manage its systematic risk , if at all? (5)