FINM 7406 Individual Assignment

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FINM 7406 Individual Assignment
Due date: 13:00 on 10th October 2024 (Monday)

Weight: This assignment is out of 20 marks and is worth 20% of your final grade

YOUR INSTRUCTIONS

• There are 3 questions to this assignment.

a) For Qs 2 and 3: You will need to upload your assignment via the link on Blackboard. The file must be in PDF. You can submit your assignment multiple times until the due date. However, only the last submission will be marked. You would also need to submit this file through TurnItIn for plagiarism analysis (see more information below).

b) For Q1, Please submit ONLY one Excel Spreadsheet via the Blackboard Assessment link. Please use an Excel Spreadsheet to show your raw data, calculation, and explanation, data source, and references (if any) for Q1.

• Please make sure you submit both a PDF file and an Excel Spreadsheet using the one submission attempt, rather than submitting each file using two attempts. That is because each attempt will overwrite all previous attempts including the files submitted in those attempts.
• Please make sure you have your full name and student number on every page of your assignment (i.e., insert a Header).
• Your PDF document should be typed in Times New Roman font, size 12. The assignment should be double spaced and have margins of 2.54 cm.
• The teaching staff will not answer any questions regarding the assignment as this gives students an unfair advantage over others. However, you may post any questions to the assignment discussion board on Blackboard and they will be answered there.
• Note that your assignment will be analysed for plagiarism using TurnItIn. Once you are satisfied with the TurnItIn similarity report for your PDF file, that copy becomes your final copy. See for instructions https://www.library.uq.edu.au/library services/turnitin-assignments (link on BB with the assignment). Please submit your PDF version of your file to TurnItIn as well, in addition to the instruction in (c) above.
• Late submissions will lose marks as per the ECP.
• Please ensure you reference appropriately and correctly in each question. For example, your references for Q1 should be at the end of Q1, NOT at the end of the document.
• Please start each question on a separate page.
• In terms of word count, please use a maximum of 150 words per mark as a guide. For example, 2 marks = 300 words max). Please use the APA or Harvard referencing style.

Questions 1 to 2: International Monetary System/Forex/Balance of Payments [6 marks in total]

In this part of the assignment, you will be investigating the cryptocurrency market and international parity conditions.

1) Using daily close data, please plot the following two exchange rates on the same chart:

i) the exchange rate between JPY (Japanese Yen) and USD from 1 July 2019 to 30 June 2024; and

ii) the exchange rate between Bitcoin (BTC) and USD from 1 July 2019 to 30 June 2024.

Indicate one specific point on each of these two lines where the trend changes, and

provide some reason(s) why this is the case.
(Hint: Please clearly mark the legend and the relevant information on the axes, and provide data sources. You can use the left axis for the JPY/USD exchange rate, while using the right axis for the BTC/USD exchange rate. Please note that you should create a chart on your own rather than copying from other sources.) (4 marks)

2) Based on your analysis from Question 1, what do you anticipate will occur in Japan’s current account and capital account for the third quarter of 2024? Could you provide a brief explanation for your predictions? (2 marks)

Question 3: Foreign Exchange Exposure [12 marks in total]

Background:

Multinational corporations (MNCs) operate in multiple countries and therefore, are exposed to various risks related to exchange rate fluctuations. These exchange rate risks can have a significant impact on the profitability, operational strategies, and overall valuation of MNCs.

Assignment:

Select a Multinational Corporation of your choice. The company should have significant operations in at least two countries outside of its home country.

Questions:
a) Company Overview: Provide a brief introduction to the selected company, its main line of business, and its international operations. (1 mark)

b) Exchange Rate Risks: Identify and discuss the specific types of exchange rate risks the chosen company is exposed to in its international operations. Explain how these exchange rate risks could impact the company’s financial performance. (3 marks)

c) Risk Management Strategies: Investigate the strategies this company uses to manage its exchange rate risks. Evaluate the effectiveness of these strategies and provide reasons for your assessment. (3 marks)

d) Recent Events: Identify any recent global events (within the last two years) that led to significant exchange rate fluctuations. Discuss how these events have affected the company’s financial performance and operational strategies. (3 marks)

e) Future Strategies: Based on your analysis of the company’s exposure to exchange rate risks and its current risk management strategies, recommend at least two strategic initiatives that the company could consider for more effective management of its exchange rate risks in the future. Justify your recommendations with relevant financial and strategic reasoning. (2 marks)

Instructions:

This is an open-ended assignment. In your analysis, ensure to include any necessary calculations and clearly articulate your reasoning. You are encouraged to use various sources to support your argument such as academic papers, financial news, and company reports. Please provide screenshots encapsulating all relevant information AND provide the reference/URL for your source.

Your grade will be influenced by the specificity and depth of your analysis pertaining to the chosen multinational corporation. For instance, the identification and detailed exploration of specific risk management strategies employed by the company will earn you higher marks than a broad, generalized discussion. It is essential to provide concrete examples (i.e., an exchange rate at a specific period of time) and detailed insight to substantiate your analysis and interpretations.

Note: 2 marks will be allocated for correct grammar and clear and logical writing.

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