This is a group assignment with four members. You can organise your groups on CloudDeakin (CD). Group sign up is on CD. It is important to register your group; otherwise you will not be able to upload the assignment.
Importantly, you need to work as a group, not just do one question each. Each member of the group needs to understand the group responses. This group assignment meets the Deakin Graduate Learning Outcome 7. In my experience the groups that work well together get the best results.
Report Format: Acknowledge your work in the appropriate manner.
Words: A guide is provided but in some cases a diagram with explanations and analysis is more appropriate than just words.
There is no need for an executive summary.
Style: Times Roman 12-pt size, single spaced, double space between paragraphs, 4 cm left margin. Include your names and student numbers in the header. Reference your work in the appropriate manner. Remember direct quotes in quotation marks. If unsure how to reference correctly please ask. In addition, there are guidelines on the University website.
Submission: All assignments will be marked online. It is important that you keep a copy. Presentation is important. Write as a business report.
Knowledge, Skills and Attributes
This assignment seeks to:
Advance your knowledge in the key area of hedging.
Challenge you to organise, plan and think.
Enhance your ability to synthesise and analyse information and data.
Consolidate your skills in identifying, retrieving and working with textual, graphical and numerical information.
Improve your ability to collaborate with others in a shared pursuit of knowledge.
Improve your problem solving skills.
2
Question 1:
Working for GLB Ltd. Treasury Division, an Australian exporter of airport surveillance systems, one day you are asked to find an avenue to invest your company’s surplus funds over one year. Based on the in-house research, your company anticipates a 1% increase in the curve in six months. The 6-month and 1-year zero-coupon rates are respectively 3% and 3.2%. After doing some research yourself, you find two different opportunities:
? your company can buy the 1-year zero-coupon T-bond and hold it until maturity;
? or your company can choose a rollover strategy by buying the 6-month T-bill, holding it until maturity, and buying a new 6-month T-bill in six months, and holding it until maturity.
1. Calculate the annualized total return rate of these two strategies assuming that your company’s anticipation is correct.
2. Same question when interest rates decrease by 1% after six months.
(5 + 4 = 9 marks) (Guide 500 words))
Question 2:
As an analyst for Vandelay Bank Treasury Department, your supervisor has handed you a chart (Figure 1) showing a recent spike of the Euro against the US dollar. You are asked to write a report:
(a) to examine and investigate the background and reasons (the risk factors) behind this dramatic forex rate spike. What are the reasons, if any, resulting in the exchange rate spike on April 3, 2015?
(b) to assess the forex rate spike within the context of fundamental analysis of forex rate.
(c) to discuss the likely fundamental impacts on the most traded currency pair in the world, EUR/USD over the next six months. Include a screenshot of the EUR/USD over the last six months and comment on the movements. (Hint: if you have no other sources for data, you can download a forex trading platform that will give you real live data. The platform is known as MT4. There are many brokers however, I recommend you download from Alpari – www.alpari.com or FXDD, www.fxdd.com. Only a DEMO account (it is free) is needed. Use the demo platform to take a screenshot.)
(3 + 3 + 4 = 10 marks) (Guide 700 words))
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Posted on May 11, 2016Author TutorCategories Question, Questions