Discuss the following statement: “A project may not be very riskyin spite of its high sensitivity to certain variables.”

"Risk management is essentially about looking at your project goals and finding out what the dangers are to those objectives, and what you can do to address those threats from the start," says one expert.

Please answer the following questions, and justify your opinion by providing peer-reviewed support to your arguments: Compare and contrast the risk versus expected rate of return tradeoff, the security market line, and determination of beta on this basis. Include explanation of all the constituents, namely security market line, risk measure, expected rate of return, risk-free rate of return, and market rate of return. Include hypothetical examples for better clarity

Explain the concept of risk management

Give an example of a risk that is clearly a diversifiable risk and one that is clearly a non-diversifiable risk.

What happens when "pet" projects do not have the requisite NPV or IRR? Do pet projects seem to be approved over other more viable projects? Why does this happen?

In a few sentences, answer the following question as completely as you can. According to the CAPM, the expected return on a risky asset depends on three components. Describe each component, and explain the role of each one in determining expected return.

A risky security has less risk than the overall market. What must the beta of this security be? O 0 but< 1 O 1 O The beta cannot be determined based on the information provided.

Why is it helpful to analyze risk in comparison to all of the other potential rewards?  Why is it also helpful to analyze risk in comparison to all other possible choices including the "risk of doing nothing"?