Q$2$a$.$ In preparation for a project that you wish to

undertake, you made an investment in a mutual

fund last year of GHS $10,000.$ The risk$-$free rate

was $8\%p.$ a$.$ and you expected a risk premium of $4$

percentage points per annum on your investment.

i$)$ How much do you expect your investment to

grow to in four years so that you can use it to

start your favourite project if gains on your

investment are expected to be compounded

quarterly?

ii$)$ What idea is conveyed by underlying "expected"

and "expect"?

bi$.$ What do we mean by the riskiness of a project?

ii$)$ List $10$ factors that may be responsible for the

riskiness of a project

iii$)$ Classify them into systematic and unsystematic

factors

iv$)$ For the capital asset pricing model what kind

of risk is important?

v$)$ Yet for you as a project management officer, the

other kind of risk too may be important. Why so$?$

vi$)$ With this in mind, what steps may you take to

try to contain the risks you face?

vii$)$ State the capital asset pricing model precisely

and completely. Define clearly any variables or

symbols that you use.

viii$)$ Of what use is the capital asset pricing model?