Systematically review and critically evaluate research from a variety of sources to explain why you have identified this as a risk, and whether you would consider hedging.

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Financial Risk Management

Question 1 (20 marks)
Assume you are a US company and expect to receive £ 24,540,000 in 3 months from now. Given the current economic environment in the US and globally, you fear that your company will be adversely affected and wishes to hedge to reduce its risk related to exchange rate changes. Based on this scenario, Answer the following questions:

Identify ONE financial risk faced by the US company given the above scenario. Systematically review and critically evaluate research from a variety of sources to explain why you have identified this as a risk, and whether you would consider hedging. Discuss in your answer the outlook for the underlying variable and cite evidence of an adverse and/or favourable direction. NB: reference list will not be part of the word count. (250-300 words)

For the risk, you have mentioned in part (a) Recommend a hedging strategy that is consistent with the outlook provided in part (a) and explain why you have chosen this strategy above all others (250-300 words)

Irrespective of your answer above, assume you are using an exchange-traded option ‘combination’ strategy to hedge your risk. Use real data from the CME group and provide the cost of the hedge (the net premium), the strike prices used, and the number of contracts required. Show all calculations and provide screenshots of the data obtained from the CME group.

 

Question 4 (20 marks)
Watch the video “Banking Royal Commission Recommendations Flounder” (see link and details below) and answer the question.

Video title – “It’s two years since the final report of the Hayne Royal Commission into finance misconduct How much protection do customers have now?”

https://www.abc.net.au/news/programs/the-business/2021-02-04/banking-royal-commissionrecommendations-flounder/13123476

Discuss the impact of the Global Financial Crisis (GFC) in 2008/09 on the chosen country’s economy (for example, students can explore the bond market and plot yield curves in their discussions).

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Firm and Country Level Analysis- Bloomberg

1. Firm-Level Analysis – TESLA
Students are required to choose the accounts of a Public Listed Company (plc) for a period of at least three years and for whom firm level information is available within the Bloomberg Database. Generate a report on the chosen company by self-study using academic resources and Bloomberg Database. The analysis should cover the following:
Use Bloomberg Functions to find out the capital structure of the chosen company and discuss the cost of capital and its implications on the value of the firm; – 10%
Trace the change of share price and illustrate the risk and return of the company in the market; – 10%
Identify a piece of related news and (e.g., using economic and financial theory) explain its impact on the share price; – 10%
Analyze the relationship between the performance of the chosen company and a relevant market benchmark index (e.g., FTSE100 Index) over the sample period (The use of quantitative techniques will merit more marks). – 10%

2. Country-Level Analysis- USA

Students need to choose the country where the above company’s headquarters is located and for whom country level information is available within the Bloomberg Database. Generate a report on the chosen country by self-study using academic resources and Bloomberg Database. The analysis should cover the following:
Discuss the international monetary environment of the chosen country (such as history, exchange rate regime, the role of the central bank in the foreign exchange market, exchange rate crises) and the effects of international trade flows; – 10%
Discuss the impact of the Global Financial Crisis (GFC) in 2008/09 on the chosen country’s economy (for example, students can explore the bond market and plot yield curves in their discussions); – 10%
Comment on the impact of Covid-19 on the chosen country’s economy; – 10%
Provide an overview of the chosen country’s currency on the foreign exchange market; – 10%
Provide country-level insights on the chosen company and its future. – 10%
Structure and presentation of the report – 10%

Explain the benefits of implementing your recommendations and justify why you are making these specific recommendations.

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Zero Based Budgeting

Read the Hospital transformation through zero based budgeting Download Hospital transformation through zero based budgetingPowerPoint presentation. The Board of Directors of Windsor Memorial Hospital has hired you to be their zero-based budget consultant. Specify how Windsor Memorial Hospital can implement a zero-based budget and provide your recommendations to the Board of Directors of the Hospital. Explain the benefits of implementing your recommendations and justify why you are making these specific recommendations.

Why is farm equipment interest rate sensitive? How could this represent a “double-whammy” for Massey Ferguson? Why does Massey Ferguson use debt to fund itself as opposed to alternatives (namely, equity)?

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Massey Ferguson’s financing strategy

– Why is farm equipment interest rate sensitive?

– How could this represent a “double-whammy” for Massey Ferguson?

– Why does Massey Ferguson use debt to fund itself as opposed to alternatives (namely, equity)?

Analyze the effects of the general environment, competition, threats, opportunities, strengths, and weaknesses relative to a corporation.

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External and Internal Environments

Requirements
Write a 4-6 page paper in which you do the following:

Choose the two segments of the general environment that would rank highest in their influence on the corporation you chose.
Assess how these segments affect the corporation you chose and the industry in which it operates.
Considering the five forces of competition, choose the two that you estimate are the most significant for the corporation you chose.
Evaluate how well the company has addressed these two forces in the recent past.
With the same two forces in mind, predict what the company might do to improve its ability to address these forces in the near future.
Assess the external threats affecting this corporation and the opportunities available to the corporation.
Give your opinions on how the corporation should deal with the most serious threat and the greatest opportunity. Justify your answer.
Give your opinion on the corporation’s greatest strengths and most significant weaknesses.
Choose the strategy or tactic the corporation should select to take maximum advantage of its strengths, and the strategy or tactic the corporation should select to fix its most significant weakness. Justify your choices.
Determine the company’s resources, capabilities, and core competencies.
Go to the Strayer University Online Library to locate three quality references. Note: Wikipedia and similar websites do not qualify as academic resources.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

The specific course learning outcome associated with this assignment is as follows:

Analyze the effects of the general environment, competition, threats, opportunities, strengths, and weaknesses relative to a corporation.

Assume you decide to invest in the business. In 100-150 words, briefly explain the due diligence that you would conduct before finalizing the deal.

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Alternative investments

1) Show your operating projections over the next five years and the profit projection in year 5 if you acquire the firm using leverage buyout. Consider this as your base case scenario. Briefly explain and discuss your numbers. You want to make sure that the readers know what you are doing. (10 marks) (300-400 words)

2) Conduct scenario testing by altering the choices you made above. You want to create two additional scenarios, ‘best’ and ‘worst’ scenarios. Clearly, ‘best’ scenario would be the scenario where the firm is valued more. ‘Worst’ scenario is where the firm is valued less. Briefly explain your assumptions and repeat (1) above and show your operating projections for the next five years and the profit projection in year 5 in these two additional scenarios. Briefly explain and discuss the sensitivity of your main findings based on your scenario testing. (10 marks) (300-400 words)

3) You generally require investments to triple in value over a 5-year period. Based on your above analysis discuss why you would, or would not, acquire this company (in 100-150 words). (4 marks)

4) Read more

Accurately identify the risks. For example, how might your firm be negatively impacted by fluctuations in the money supply? Provide specific examples to illustrate each identified risk.

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Risk Analysis of Final Project Company

Specifically, address the following critical elements:
Accurately identify the risks. For example, how might your firm be negatively impacted by fluctuations in the money supply? Provide specific examples to illustrate each identified risk.

Use appropriate financial tools to measure (i.e., quantify) the risks. For example, consider calculating your firm’s debt-to-capital ratio, debt/equity ratio, interest coverage ratio, and degree of combined leverage.

What stock markets are the MNC listed on? Give the stock price at the MNC’s year end and explain any fluctuations in price over the past year. Does it appear that the MNC issues stock in foreign countries?

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Analysing a Multinational Corporation

1.What stock markets are the MNC listed on? Give the stock price at the MNC’s year end and explain any fluctuations in price over the past year. Does it appear that the MNC issues stock in foreign countries? (5 marks)

2.What are the main currencies that the MNC uses to conduct its international business? Prepare a chart or table showing the direct and indirect quotation of each foreign currency in relation to the home currency of the MNC at the last year-end and the previous one. Also prepare a cross-exchange rate chart for these currencies for the same dates. (8 marks)

3.Illustrate, using diagrams or tables and calculations, how the values of these currencies have changed (appreciated or depreciated) over the past year relative to the MNC’s home currency, and comment on the main reasons for these changes.To answer this question, review a foreign exchange table provided online for the company’s year-end and another table containing quotations from the previous year-end date. The answers to this question will be used in later sections to determine how the firm was affected by changes in the values of these currencies. (10 marks)

4. For each of the main foreign currencies used by the MNC, describe the level of volatility of the currency and the level of government intervention, if any. How have these factors influenced the MNC’s business, especially over the past financial year? 6 marks

5. Using actual rates for the main currencies where the MNC conducts international business illustrate and determine if any type of arbitrage is possible (locational, triangular and covered interest). 9 marks

Write an initial post in which you explain the relationship between TIPS and the consumer price index. What are the benefits and drawbacks of buying TIPS?

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Discussion 6-1 Treasury Inflation-Protected Securities

Inflation-linked bonds, also known as treasury inflation-protected securities (TIPS), are used to protect against inflation. A good understanding of TIPS is necessary for capitalizing on market opportunities.

Once you have read the chapters assigned for this module, write an initial post in which you explain the relationship between TIPS and the consumer price index. What are the benefits and drawbacks of buying TIPS?

What did you learn? Was there anything unexpected? What changes will you be making as a result? How do you plan on investing their funds – why? How often will you review the Plan? What benefits are there to budgeting?

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Finance Management: Personal Budget Report

Part 1 (must be submitted via Excel) – Personal Budget
You need to develop a personal budget. Try to be as realistic as possible. If you are going to school and not working then do some research to find out what salary you will be making when you graduate. If you are working full time you can use your income now or an estimated amount assuming you will be making more money when you graduate.
For Example: Budget Actual
Gross Monthly Pay

Total est deductions
Net Pay

Rent/Mortgage
Utility – Electric
Utility – Gas
Utility – Water
Cable/Internet
Phone/Cell
.
.
.
Total Expense

Total savings

Take your total savings and multiply by 12 for 12 months. This is your estimated saving (payment) per year. (If you want to do a more elaborate budget you can).

To make this budget useful do this in excel so you can actually use it.
Note: You can do your budget however you want as long as it is clear and understandable to the reader (me) and you.

Part 2 A: (must be completed in Excel) – Analysis:

Using the budget in part 1; Use as many time lines as you need forecast all your projected savings (investments) to get each investments’ future value. You will have to determine your PV, I/y, N, PMT then calc FV

If you don’t have any idea on the I/y you could use 5 or 6% to be conservative. N depends on your current age and when you think you will retire.

Savings
401k or (403B) whichever you use
IRA’s….
Home Ect…….

Once you add up all the future values from step 2 above, and do a time line to determine how much you will be able to spend each year assuming you are going to spend all your money. I.e. your future value will be 0. To calculate N, you have to make a lot of assumptions. For example, if you are planning on retiring at age 65 and think (hope) you will life until you are 90 (25 years) your N will be 25.

Part 2 B: (must be completed in Excel) – Scenario Analysis:

Run at least 3 different scenarios to see the impact of decisions. Some examples may include:
What happens if you delay start of Savings for 5 years?
What happens if you work 3 more years?
What if the interest rate is higher/lower?
What if you have more to save after student loans are paid off?

Part 3: (must be turned in Word Via SafeAssign) – Reflection

Once you are completed with the three sections above write a page or two on what you learned from this project. This is open ended but I expect at a minimum of 1 page as a write up. Reflection could include but is not limited to the following questions:

What did you learn?
Was there anything unexpected?
What changes will you be making as a result?
How do you plan on investing their funds – why? How often will you review the Plan?
What benefits are there to budgeting?
What specific changes will you make as a result of this assignment?