Question 1 (5 points): Assume a Saudi Multinational Corporation decided to do a project in Germany one year ago (October 1st, 2021) which would be completed on September 30th, 2022. If the project cost 100 million Euro and expected to generate income of 150 million Euro on September 30th, 2022. The exchange rate at the beginning of the project is 0.23 Euro/SAR and it is 0.27 Euro/SAR at the end of the project. There is no derivative bearing SAR currency, but there is a way a Saudi firm engage into the forward / option market.

a- Calculate the initial investment in SAR.

b- show the choices for financing this project by the Saudi firm? Just show without calculation.

c- Calculate profit from this investment in Euro and SAR, also show whether the Saudi firm hurt or benefit from changes in the exchange rate movement.

d- How would the Saudi firm hedge against the exchange rate risk?

Question 2 (2 point): The US is considered a country that borrow at lower cost of capital than the rest of the world; briefly explain the reason behind this fact.

Question 3 (3 points): According to Vision 2030, Saudi Arabia planned to diversify its production and one of the divisions of production is Small & Medium Enterprises (SME). The goal by 2030 to make 35 percent of GDP from SME. Briefly explain whether Saudi Arabia will be able to achieve this goal within this time frame and how would the Saudi private equity market attract foreign SME. You might do a little research about this.