1) ABC Corporation requires raising a important amount of capital for the expansion project. Corporation has determined to open the new strategic business unit. Must the corporation issue more stock or have the bond offering to raise capital? Fully describe the advantages and disadvantages of both approaches. Suppose the present economic environment applies to corporation's decision.
2) American put option to sell Swiss franc for USD has the strike price of= 0.80 and time to maturity of= 1 year. Volatility of Swiss franc is 10%, USD interest rate is= 6%, and Swiss franc interest rate is= 3% (both interest rates continuously compounded). Current exchange rate is= 0.81. Use a 3 time step tree to value option.