1) You have two investment options. You can either invest $5,000 today once for ten years at an interest rate of 12%/year compounding on a yearly basis or you can invest the same amount of money for the same period of time in another project that has a yearly interest rate of 10% and compounds on a monthly basis. Assuming that both investments are completely risk free, which option will be better for you? (8 Points)

Option 1

Option 2

Both are the same.

The question does not include enough information to answer it.

Depending on the risk aversion of the investor, it could be either Option 1 or Option 2.

2) Your friend told you about a new real estate fonds that you should absolutely consider when investing money in the future. You would have to pay a monthly fee of $100 and could receive a monthly compounding interest rate of 0.5%. You receive a one time payment when the fonds is due. Given this information, should you invest in the fonds? (4 Points)

Invest in the fonds!

Better invest in other opportunities!

We do not have enough information for a well educated decision.