lronTrade is considering investing in a mining project that can be sold anytime during its life for $69,000. The value of the project is $81,000 today. During each of the next two 6-month periods, the value of the project is expected to either increase by 30% or fall by 30%. The risk-free interest rate is 10% per six months. What is the value of the embedded option using the risk-neutral method?

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Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.