3. Based on the investment-uncertainty literature answer the following questions:

3.1 Describe four different measures of uncertainty. What are the strengths and weaknesses of each measure (max. 600 words). [10%]

3.2 Theoretically, how can uncertainty impact investment decisions of firms? Does the impact of uncertainty on investment depends on the type of costs facing the firm? (max. 600 words) [10%]

3.3 Summarize the literature on uncertainty and firm investment. Is there conclusive evidence on how uncertainty impacts firm level investment? Explain. (max. 1200 words) [20%]