Please read the uploaded text and use it as your primary source of information for answering questions 2 and 3 below. you may use other resources but please use the chapter to answer question 2 and 3.
1)When considering stand-alone risk, the return distribution of a less risky investment is more peaked (tighter) than that of a riskier investment. What shape would the return distribution have for an investment with (a) completely certain returns and (b) completely uncertain returns? What are the two types of portfolio risk? How is each type defined? How is each type measured?
2)Describe the three types of project risk. Under what situation is each of the types most relevant to the capital budgeting decision? Which type of risk is easiest to measure in practice?
3)Explain each of the following risk assessment tools. Include the strengths and weaknesses of each.
-Sensitivity analysis
-Scenario analysis
-Qualitative risk assessment
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