An investor must choose between two options. The first option (A) offers AED 10m for AED 2m a year for 5 years. The second optopm (B) offers AED 11m of AED 1m a year for four yeats and AED 7m in year 5.   compare the present value of each option by assumong a range of the required rate of return of the investor say 8% 9% 10% 11% and 12% what is your advice?

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A:

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Q: I, what is the option's value?

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A: Here,

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Q: Calculate the risk neutral probability

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.