Consider the data on European put option, as described below. stock price today: 5.03 exercise price: 5.00 Maturity: One year risk free interest rate: 0.4822% per annum stock prices may either go up by 57.04% or down by 36.32% between now and the maturity. (i) use a one-period binomial tree approach to value the put option (ii) replicate an investment in the stock by a combination of the put option and risk-free lending.

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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.