1 Investing in a high risk project necessarily yields in expectation a higher return. (2 Points)

a True

b False

2 Which equation would you use to calculate the future value for a lump sum investment if your investment compounds on a monthly level? (6 Points)

3 Risks should always be eliminated, if this is impossible, any project should be shelved immediately. (2 Points)

a True

b False

4 Why is risk management an important component of dealing with risk in real live? (4 Points)

a Risk management helps to avoid risk.

b Risk management helps to tailor the level of risk of a project to the level of risk aversion of an investor.

c Risk management allows organizations to proactively engage with risks and reduce their damage when possible.

d Risk management can reduce the harm when things are going wrong, it is, therefore, efficient to imply a risk management program (RMP) only when the project is underperforming.