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International Financial Management Assignment
International Financial Management Assignment
| ORDER # | 100384 |
| PAPER TYPE | MATH PROBLEMS |
| WRITING LEVEL | UNDERGRADUATE |
| WRITING STYLE | APA |
| # OF SOURCES | N/A |
| # OF PROBLEMS | MULTIPLE |
International Financial Management Assignment Guidelines
Objective of the Assignment
This assignment is to maximize the company investment portfolio via foreign exchange management. To implement a portfolio:
- I choose USD/JPY, JPY/HKD, And I marked the spot rates and relevant financial data.
- I forecasted the forward rates of those currencies based on the IRP, PPP or IFE.
- I Choose two MNCs : APPLE And Amazon stocks, marked the share prices and set up the foreign exchange portfolio. The portfolio starts with HK$2,000,000, and includes currencies and MNCs stocks.
- I saved and recorded the data accordingly.
You should do: To analyze the portfolio performance and also attain the objective of this assignment, the analysis includes (but is not limited to) the followings:
1.- To forecast the foreign exchange rates; and/or
2.- To evaluate any exchange rate risks
Data Collection Schedule:
Booking Form for Data Collection Timeslot:
| Week | Date | Timeslot (Any 1 hour from 09:00 – 18:00 HK Time) | Tutorial Group | Student Name | Student No. |
| 7 (Practice) | 1 April | 12:00-13:00 | |||
| 8 | 8 April | 22:00-23:00 | |||
| 9 | 15 April | 22:00-23:00 | |||
| 10 | 22 April | 22:00-23:00 |
| Currency | Spot Rate | Estimated Forward Rate* | Remarks | |
| 1 | USD/JPY | |||
| 2 | JPY/HKD | |||
| Company Shares | Share Price | No. of shares Buy/Sell | Remarks | |
| 1 | APPLE | |||
| 2 | Amazon | |||
*Calculation details should be shown on the report.
Sources of Information
Data Collection:
- Bloomberg: https://www.bloomberg.com/asia (or Bloomberg Terminal in OUHK Library); or
- MarketWatch: marketwatch.com/
Here is my 3 records !!!
Trading Records: 8 April
| Currency | Spot Rate | Estimated Forward Rate* | Remarks | |
| 1 | USD/JPY | 109.1100 JPY | 109.4488 JPY | |
| 2 | JPY/HKD | 0.071280 HKD | 0.07060 HKD | |
| Company Shares | Share Price | No. of shares Buy/Sell | Remarks | |
| 1 | Amazon. com, Inc. | USD 3,314.26 | Buy 50 | |
| 2 | Apple Inc. | USD 129.84 | Buy 100 | |
Estimated Forward Rate:
USA Forward Rate: 0.15%
Japan Forward Rate: -0.16%
Hong Kong Forward Rate:0.8%
F0=S0*
Forward rate of USD/JPY (IRP):
F0 = 109.1100* = 109.4488JPY
Forward rate of JPY/HKD (IRP):
F0 = 0.071280* = 0.07060HKD
Currency FX:
USD/JPY:109.1100%
22:00 23:00
https://www.bloomberg.com/quote/USDJPY:CUR
JPY/HKD: 0.071280%
22:00 23:00
https://www.bloomberg.com/quote/JPYHKD:CUR
Overview:
22:00
Interest rate
USA: 0.11250% (1 month)
https://www.global-rates.com/en/interest-rates/libor/libor.aspx
Japan: -0.08017%
https://www.global-rates.com/en/interest-rates/libor/libor.aspx
HK:0.86%
https://tradingeconomics.com/hong-kong/interest-rate
Inflation:
https://www.global-rates.com/en/economic-indicators/inflation/inflation.aspx
USA: 0.547%(monthly basis)
Japan: 0.000%(monthly basis)
HK:0.3%
https://tradingeconomics.com/hong-kong/inflation-cpi
Two company:
Amazon.com, Inc.
22:03 23:00
Apple Inc.
22:04 23:00
Here is my second record.
Trading Records:Date: 15/04
| Currency
| Spot Rate | Estimated Forward Rate* | Remarks | |
| 1 | USD/JPY | 108.7100JPY | 108.9182 JPY | |
| 2 | JPY/HKD | 0.071465HKD | 0.072134 HKD | |
| Company Shares | Share Price | No. of shares Buy/Sell | Remarks | |
| 1 | Amazon. com, Inc. | USD 3,380.00 | Buy 10 | |
| 2 | Apple Inc. | USD134.45 | Buy 100 |
Date: 15/04
Estimated Forward rate:
Estimated forward rate by PPP:
Inflation rate of US = 0.708%, Inflation rate of Japan = -0.392%, Inflation rate of HK= 0.3%
Estimated forward rate of USD/JPY forecast by PPP:
F0 = USD/JPY spot rate x {1+ [Inflation rate (US) – Inflation rate (JP)]}
= 108.7100 JPY/USD x {1+ [0.708% – (-0.392%)]}
= 109.9058 JPY/USD
Estimated forward rate of JPY/HKD forecast by PPP:
F0 = JPY/HKD spot rate x {1+ [Inflation rate (HK) – Inflation rate (JP)]
= 0.071465 HKD/JPY x {1+ [0.3% – (-0.392%)]}
= 0.071959 HKD/JPY
Estimated forward rate by IRP:
Estimated forward rate of USD/JPY forecast by IRP:
Interest rate: USA: , Japan: , HK:0.86%
F0=S0*
=108.7100 JPY/USD x
= 108.9182 JPY/USD
F0=S0*
= 0.071465 HKD/JPY x
= 0.072134 HKD/JPY
Compare two estimated forward exchange rates by PPP and IRP respectively, we found that the estimated exchange rate by IRP may be more feasible because it is within range of variation a day showed on Bloomberg, so we choose the estimated exchange rate by IRP.
Data Collection: 15/04
Currency FX:
USD/JPY:108.7100
22:00 23:00
https://www.bloomberg.com/quote/USDJPY:CUR
JPY/HKD: 0.071465
22:00 23:01
https://www.bloomberg.com/quote/JPYHKD:CUR
Overview:
22:05
Interest rate
USA: 0.11563% (1 month)
https://www.global-rates.com/en/interest-rates/libor/libor.aspx
Japan: -0.07583%
https://www.global-rates.com/en/interest-rates/libor/libor.aspx
HK:0.86%
https://tradingeconomics.com/hong-kong/interest-rate
Inflation:
https://www.global-rates.com/en/economic-indicators/inflation/inflation.aspx
USA: 0.708%(monthly basis)
Japan: -0.392%(monthly basis)
HK:0.3%
https://tradingeconomics.com/hong-kong/inflation-cpi
Two company:
Amazon.com, Inc.
15/04 22:00 15/04 23:00
Apple Inc.
15/04 22:00 am 15/04 23:00 am
Here is my last record
Trading Records: Date: 22/04
| Currency
| Spot Rate | Estimated Forward Rate* | Remarks | |
| 1 | USD/JPY | 108.0500JPY | 108.0505 JPY | |
| 2 | JPY/HKD | 0.071816HKD | 0.0718178HKD | |
| Company Shares | Share Price | No. of shares Buy/Sell | Remarks | |
| 1 | Amazon. com, Inc. | USD 3,359.81 | Buy 10 | |
| 2 | Apple Inc. | USD132.82 | Sell 100 |
Date: 22/04
Estimated Forward rate:
Estimated forward rate by PPP:
Inflation rate of US = 0.708%, Inflation rate of Japan = -0.392%, Inflation rate of HK= 0.3%
Estimated forward rate of USD/JPY forecast by PPP:
F0 = USD/JPY spot rate x {1+ [Inflation rate (US) – Inflation rate (JP)]}
= 108.0500 JPY/USD x {1+ [0.708% – (-0.392%)]}
= 109.23855 JPY/USD
Estimated forward rate of JPY/HKD forecast by PPP:
F0 = JPY/HKD spot rate x {1+ [Inflation rate (HK) – Inflation rate (JP)]
= 0.071816 HKD/JPY x {1+ [0.3% – (-0.392%)]}
= 0.07231 HKD/JPY
Because the estimated forward rate of USD/JPY forecast by PPP Theory is out of variation range of a day showed on Bloomberg these days, so we use IRP theory to forecast again.
Estimated forward rate by IRP:
Estimated forward rate of USD/JPY forecast by IRP:
Interest rate: USA: 0.11025% Japan: -0.07300%, HK:0.86%
F0=S0*
F0 = USD/JPY spot rate x [ ]
=108.0500 JPY/USD x
= 108.0505 JPY/USD
F0=S0*
F0 = JPY/HKD spot rate x [ ]
= 0.071816 HKD/JPY x
= 0.0718178 HKD/JPY
Compare two estimated forward exchange rates by PPP and IRP respectively, we found that the estimated exchange rate by IRP may be more feasible because it is within range of variation a day showed on Bloomberg, so we choose the estimated exchange rate by IRP.
Data Collection: 22/04
Currency FX:
USD/JPY:108.0500
22:00 23:00
https://www.bloomberg.com/quote/USDJPY:CUR
JPY/HKD: 0.071816
22:00 23:01
https://www.bloomberg.com/quote/JPYHKD:CUR
Overview:
22:08
Interest rate
USA: 0.11025% (1 month)
https://www.global-rates.com/en/interest-rates/libor/libor.aspx
Japan: -0.07300%
https://www.global-rates.com/en/interest-rates/libor/libor.aspx
HK:0.86%
https://tradingeconomics.com/hong-kong/interest-rate
Inflation:
https://www.global-rates.com/en/economic-indicators/inflation/inflation.aspx
USA: 0.708% (monthly basis)
Japan: -0.392%(monthly basis)
HK:0.3%
https://tradingeconomics.com/hong-kong/inflation-cpi
Two company:
Amazon.com, Inc.
22/04 22:00 22/04 23:00
Apple Inc.
22/04 22:00 am 22/04 23:00 am
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