Currency Course Works Samples For Students

DQ1: Exchange Rates.

A. I spent my recent holiday vacation in South Africa, which is quite an inexpensive destination with various world class financial institutions that offer attractive exchange rates. Upon arrival at the O. R. Tambo International Airport in Johannesburg, I found a forex bureau that offered forex exchange at 0% percent commission to travelers. I exchanged 2000 US dollars and received 21,400 South African Rand (R).
During the next four weeks of my vacation, I exchanged currency once at a forex bureau that charged 5% commission and later found out that I could exchange currency in Automated Teller machines at ...

3.1 Assess the factors contributing to the establishment of general and specific rates of interest.

Interest rates are the prices that individuals or institutions pay for the use of various financial assets. General interest rates apply to a cross section of individuals and have the most influence on the economy of a country. The government through the central bank aims at monitoring and influencing the direction of general interest rates. Specific interest rates on the other hands are narrowed down to apply to a specific financial instrument or a small group of financial instruments . These specific interest rates do not affect the macroeconomic ...

Answer 1

Spot and forward market

Foreign exchange rate is the means of expressing the worth and the value of the economy by the value of its currency by the value of another one. The normal market usage is to in quoting the exchange rate to spot value. It, therefore, means that for spot date, the delivery for two business days from the trade date, the payment is always done two days after delivery except for Canada versus US where it is two days. The two business days are usually essential in order to allow the trade information between the counterparties involved being agreed upon ...

Business Management

Event 1: Rising fuel prices: The constant sorrow of the airline industry

The consistent volatility in oil prices has been a serious concern for airline companies now. Although the mid-east crisis seems to be solved now and oil prices have now returned to a more sustainable level with the current market prices hovering around $105-106/ barrel, however, the upside-downside trend in the oil prices has endowed an unwanted pressure on profitability of airline companies. The issue is not about higher or lower price, but relating to the rate at which they increase or decrease as the airline company has to set ...

Introduction

One of the most enigmatic figures of modern times is Hungarian-American business man George Soros. George Soros is the chairman of the Soros Fund Management, an American hedge fund company that was established by George Soros in 1969. The company is headquartered in New York and as of 2010 the company was recorded as the most profitable firm in this particular industry . According to Ahmed (2011), the company’s average rate of return is an astounding 20% per year since the 1980s. The Soros Fund Management is an investment adviser and its primary client is the Quantum Group of ...

Question A

Introduction

Currency risk arises due to fluctuations of the currency as a result of supply and demand of the currency. Any business or companies that carry out operations in another country is subject to currency risk. Currency risk management helps to cushion the business against any adverse effects of currency fluctuations. Exchange rate movements may result to a gain to the business or a loss. Due to the uncertainty involved in predicting the effects of currency fluctuations, businesses tend to engage in currency management options.

There are various methods that can be used in managing currency risk. Forward foreign exchange, also known ...

Operating exposure refers to the extent or scope to which the operating cash flows of the firm are usually affected by variations in exchange rates. The random changes of exchange rates affect the competitive position of the company in the market though these changes may not be measurable easily.
The operating exposure for retailers may be reflected in relation of both the competitive effects and the conversion effects.

The retailers therefore face difficulties especially in setting their prices due to the fluctuations in the exchange of foreign currency of different countries.

In the context of the conversion effect ...

The Maastricht Treaty launched the European Monetary Union in the year 1992. The union comprised of two parts, which included the creation of euro the common currency and creation of the European Central Bank, which coordinates all monetary policies in the Eurozone. The treaty also created the rules for countries willing to join the union. The other element of the treaty was the national central banks of the 16 member countries. European Monetary Union creation has led to price stability and proper management of public finances (McKay Volz & Wolfinger 2011).The final phase of the single currency introduction ...

Question 1

Maintaining a fixed exchange rate is critical in stabilizing the value of a currency against an anchor currency as it makes trade and investment easier and more predictable. Nonetheless, central banks face a number of problems in their attempts to maintain fixed exchange rate, two of which include balance of payment problems when attempting to maintain a weak currency and reduced risk perception while borrowing in foreign currency when attempting to maintain a strong currency. When maintaining a strong currency, a false perception arises that the foreign exchange rate may not change thereby leading to reduced risks perceptions when borrowing in foreign currency such as the case of ...

What makes every nation distinctive from each other is that they posses their own principles to be adhered to in every feature. International business practices are entirely not an exception to that particularly; many corporations are target to enter the global market to discover additional paths for profit.

Therefore it is understandable for my client, MNC to do the same. In order to sufficiently advise the client, it is apparent that we first analyze the situation in Latin America and weigh options. Latin America is universally professed as an unstable business setting. It is hopeless to try to dispute ...

1. How is international financial management different from domestic financial management?

International financial management is similar in many ways to domestic financial management. However, there are several key differences. In domestic finance, the issue of exchange rates is not common. However, international financial management involves use of exchange rates considering the fact that different currencies are used in this market. Managers should be aware of implications of exchange rates in their managerial activities. International financial management involves being aware of the risks associated with exchange rates. This is not the case in domestic financial management where there are no exchange rate risks (Brigham, 2011).

International financial management involves acquiring capital ...

- Discuss and compare hedging transaction exposure using the forward contract versus money market instruments. When do alternative hedging approaches produce the same result?

International trade is a growth strategy that many firms have taken because of the many benefits a firm gets from it. However all business activities have inherent risks. Traction exposure is the term for the risk that companies doing international trade face. Investopedia (2012) defines this as the risk associated with the fluctuations in exchange rates which affect corporations that have entered into financial obligations thus leading to possible losses. Transaction exposure is well-defined and is often ...

A public corporation is an organization that is formed by the government to perform certain functions. This corporation has many advantages. In the first place, the corporation has finance to acquire the best management personnel. Therefore, the organization has the ability to perform well due to good management.

Public corporations have no limited life. They are initiated to perform their activities and they cannot close easily unless the government decides to do so. The corporations have a good capital base. It can be able to easily access funds to increase its investment hence expand its activities. When the corporation is ...

FOREWARD

This reports aims at shedding light in the best strategy for Ahold to adopt in identify the best target company to take over its aims to expand its food retailing services.
In this report the best comparison that will lead to aid in best decision making is by use of ratios since the business are reporting in different currencies and since the use of exchange rate would be biased due to volatility of the exchange rates overtime and thus such results would be quite unreliable and might lead to wrong decision making which would adversely affect the predator ...

The first foreign bond issue is the Gazprom bond issue. It is an Eurobond; which was issued in the Russian Ruble currency. The issue date was 21st February 2011. The maturity date for this Gazprom bond is 12th February 2017. The coupon is 5.136% per annum (Williams 31). Price for the Gazprom bond is 1,000 Rubles. However, details on the yield for this bond are unavailable. The seniority for these bonds has been set above that of other bonds by this company. This applies to those bonds which are of a term less than the expiry date of 2014. ...

Since the time of the early civilizations, money became an integral part of society as people use it to attain basic needs and specialized services, including luxury. As the years progressed, the image of money had changed from circular stones to paper money and metal coins and its value varies from its country of origin (currencies) and the resource or service required. In recent years, money has taken another makeover as payable services and goods are now available online for people on the go, creating “electronic money”. With the introduction of electronic money, there are a few sectors now ...

Jedi monetary policy is an article that was written by Jonathan Wright in Washington. The article was written on 8th September 2011. The article is criticizes the actions that the Swiss national bank has taken to stimulate the economic growth of the country.

According to the article, the Swiss government aimed at stimulating the economic growth by the applicatication of macroeconomic policies. The Swiss government aimed at increasing the economic growth rate to at least 6 percent. The writer of the article points out several policies that the Swiss national bank could use to stimulate the economy. He shows ...

Question A

According to Gregory Mankiw (2011), trade balance reflects the difference between net worth of exports and imports in a given country. Consequently, positive trade balance suggests in monetary value country exports more than it imports, while negative trading balance (trade deficit) is associated with dominance of imports over exports. Economists argue that trade deficit is not always considered to have a negative impact on the national economy, however it often creates potential risks which may result in harsh economic consequences if they are not addressed properly. For example, if net exports are negative it is assumed that proceedings from exports are ...

Major focus in this paper will be on china and subsequent cross-cultural factors which significantly affect the market approach and business strategy a business undertakes. Additionally, china is one of the countries in the world enriched with diverse social and cultural practices. On the other hand, china has a diverse business culture which needs to be put into consideration before starting any market approach. Therefore, there is always a greater urge to have a cultural consultant in taking any measures concerning the market. Consequently, Chinese culture may significantly affect the performance and profitability of the company.

Generally, china has a wide culture with various ...

The most important economic policy today is one that will spur economic growth. The economy has to emerge from the serious problems it is currently engulfed in which include: high unemployment, reduced consumer demand, a shrinking middle class, a large national deficit and the mishaps of the housing estate. Unemployment is a major issue of concern to date. It is critical that a policy that will spur economic growth be implemented because the other variables are largely dependent on the level of economic growth (Von Mises, 2006). A fiscal policy that will increase incomes of household will raise aggregate demand, and then firms ...

Factors influence a country’s level of exports and imports

The main factors determining demand levels for imports are the national income and the level of competitiveness of locally manufactured tradable goods and services. An increase in income will also lead to an increase in the demand of imports and a decrease in national income will lead to less demand for imports. Another factor that can affect imports is an increase in the price of imports compared to locally manufactured substitutes. If the former is cheap, it will lead to a fall in demand for imports. The fall increase in the price of imports compared to locally manufactured substitutes will lead ...

What is fiat money? Why is fiat money important in the United States today?

Fiat money is a kind of money that has no intrinsic value. It has value of exchange but no value in use. It is used as money because the government decreed it as valid money and the public willingly accept it in exchange of goods. Normally, fiat money bears “legal tender” feature and includes modern paper currency, coins and checkable deposits.

This kind of currency is very important in today’s modern economies like the United States primarily because it is widely used as ...

Financial risk of an enterprise can be defined as the probability of adverse financial consequences in the form of loss of income and capital under uncertainty conditions for its financial activity. Financial risks have a great variety and for the implementation of effective management are classified by several main features that will be considered below.
Financial risks arises in the process of enterprise relationships with financial institutions (banks, financial, investment, insurance companies, stock exchanges and others). Causes of the financial risk are inflation factors, the growth of bank interest rates, reduction of the value of securities and others.

Financial risks are roughly divided into two types:

1) ...

- Introduction

IBM is a world leader company in information technology and stands as the largest revenue generating Company in its field. In the past 50 years, IBM has earned a place for itself as the pioneer in information technology developments and innovation. The Company manufactures products ranging from hardware to software for its impressive clientele around the world. These products are designed for another range of storage products, line of business servers, customized microchips including the application software. In addition to manufacturing, IBM also serves as a consulting and outsourcing agent. The new information age is quite challenging to compete ...

1. Critically evaluate the following suggestion: “If the price elasticity of demand for food is low, therefore if you own a restaurant, you can charge higher price to increase revenue”.

Consumers’ sensitivity to price is known as the price elasticity of demand. Simply put, it measures the degree of responsiveness of consumers to a given change in price. A good with an elastic demand will have a value greater than 1 and will experience that people are very sensitive to a given change in price. Products with an inelastic demand will find that even if price increases by a small amount, the quantity ...

Answer 1)

Bonds are an attractive investment assets and are appealing for any investor because of fixed interest income option which is not available in stocks. Furthermore, certain bonds as Treasury and Federal Agency bonds also offers tax advantages to the investor. Thus, such distinctive feature makes bonds an appealing investment class.

Some of the bonds which are currently available are:

- Treasury Bonds
- Agency Bonds
- Municipal Bonds
- Corporate Bonds

Below are some common investment objectives that can be fulfilled through investment in Bonds:

i) Fixed Income Security:
Since bonds are fixed income securities, they are known to offer a certain interest income depending on the type of bond purchased by the investor. This feature is not available in ...

Introduction

In a classic financial world as predicted by Modigliani and Miller (M&M), the risk management should be irrelevant. When there are no information asymmetries, taxes or transaction cost involved, hedging will not add any value to a firm because shareholders or companies can diversify their portfolio in such a way that their overall risk will be totally hedged (Lin and Chang 2006). However, the real world is far from the Modigliani and Miller model. In practice, we see imperfections in the financial market. This imperfection may actually create a rationale to reduce the volatility of earnings for a firm through hedging.

Many empirical ...

Discuss the measures that a government can take to improve the balance of trade in the short- term

A depreciation in the value of currency exchange of a country should help boost oversees’ demand for U.S. exports because American firms will be able to supply more cheaply internationally (Keeler, 2007). A country can devalue its currency by a large margin in one or two installments in quick successions so that foreigners can find goods and services of a country cheaper to buy and boost exports rapidly.

Another method that a government can use to improve balance of trade over the short term is to reduce demand in the economy thereby reducing consumer spending in the economy. The government can use fiscal ...

Introduction

“Billions over Baghdad” is an investigation report, prepared by Vanity Fair contributing editors Donald Barlett and James Steele, published in the October 2007 edition of the magazine. The report exposes how those billions of dollars that flew from Federal Reserve Bank of New York to the War Land of Iraq in the name of financial assistance and human aid, get disappeared as if these haven’t even exist. The incompetence of US officials overseeing the entire matter, the mismanaged transfer to the local bodies and the corrupt and greedy contractors and ghost employees made the entire game possible. ...

1) Describe how to formulate and test hypothesis about a population mean and/or a population.

A hypothesis essentially refers to the prediction of the expected outcome of a research process. When one intends to research a particular subject, event or outcome, he ought to state his expected outcome. There are two types of hypotheses; null and alternate hypotheses. The null hypothesis refers to what the researcher is trying to nullify, disapprove or reject. In testing the hypothesis, the researcher attempts to prove the hypothesis either wrong or right. In hypothesis testing, the researcher needs to first state both the null and alternate hypotheses. The researcher then needs develops an analysis plan which describes how to use ...

Explain and illustrate using diagrams which factors influence a country’s level of exports and imports.

A countries exports and imports can be influenced by the balance between the price competitiveness and non price competitiveness.

Competitiveness can be explained as the price of exported goods to the countries in which the commodities have been exported to. This is majorly considered by the difference in the exchange currency. There has to be a balance between the currency of the country exporting goods and the country that will be receiving the exported goods. This will affect the price of that commodity in the ...

Overview of economic performance of GCC countries

The Gulf Cooperation Council comprising of Kuwait, Bahrain, United Arab Emirates, Qatar, Saudi Arabia and Oman are oil rich nations representing an aggregate of 35.7 percent of global oil reserves. These nations are the largest exporter and producer of petroleum and have experienced excellent economic growth since the year 2008. The economic growth rate of the GCC nations has increased threefold to $1.4 trillion in the year 2011. The estimated growth of Gross Domestic Product for the GCC nations in the year 2013 is forecasted to reach around $1.5 trillion. The aggregate growth of Gross Domestic Product in the ...

International finance is not simply corporate finance with an exchange rate. It is true that the exchange rate is an integral part of international finance in terms of foreign exchange. It is true that the foreign exchange markets that offer critical information and opportunities for international corporations as they undertake financing decisions and capital budgeting (Cohen & Yagil, 2007). However, international finance is about cross-border trade, and it is the dynamics of this trade that influence the exchange rate. According to Rhodes & Robinson (2008), international trade and the consequent international corporations are influenced by a number of factors which include cultural, ...

Introduction to Business

- Advantages and disadvantages of Mc Donald’s ringing up sales in so many foreign currencies worldwide

The advantages of Mc Donald’s operations in so many regions include the ability of the company to face the economic downturn as it may affect some regions of the world, while the otger regions of the world may remain unaffected with the economic downturn or may be less affected. At the time of the US economic recession, the company benefited from the increase in sales in the Asia region that balanced the loss in sales in the US region.

The company has the ability to adapt itself to various tastes of customers in different regions of the world. ...

Introduction

Today many people consider establishing their businesses with the aim of increasing their income streams. However, it is imperative that prospective entrepreneurs have knowledge on the types of business units prescribed by law. This understanding enables them understand the risks associated with particular business units and the capital requirement involved. After deciding the type of business to invest in, entrepreneurs must consider the sources of finance available to them, and the type of accounting skills necessary for running of the venture. Hence, this report analyzes different forms of business units, types of accounting skills, and sources of finance available ...

In this paper, to propose two ways in which free cash flow uncertainty could be avoided rests on the assumption that a business is evaluated capital projects whose inflows and outflows are denominated in any foreign currency. In such a case, one way to reduce uncertainty about cash flow stream is to hedge against the currency risk because foreign exchange market is so volatile that large fluctuations in currencies are witnessed every minute .
Uncertainties which are inherent in projecting revenue and underlying costs and the vulnerability of the FOREX (foreign exchange) market as well as related derivatives, all of these ...

Global corporations operate in large international operation amongst many foreign countries. This means that for the global corporations needs to have well-defined managerial strategies so as to approach the different cultures and ethnic imbalances in most of the foreign countries. In this case, the global corporations employ the five managerial strategies that are leading, controlling, organizing, coordinating and technology for effective management.

Controlling and planning is very complicated when it comes to the international arena. The biggest challenge in planning in the international arena is the risk to lose profit due to the fluctuation in the exchange rates. Through ...

Additional Information that needs to be considered before making the Investment decision

Wilson International needs to undertake extensive research in order to establish the pros and cons of the prime target market (Paul, 2009). Must business persons to analyze the relevant sectors of the economy before making crucial investments decisions. A number of factors such as the public’s expenditure level, the inflation rate, investment trends, and availability of labor, legal infrastructures, government policies, and market size need to be considered.

Also, the general macroeconomic stability and taxation on the capital gains must be taken into account (Paul, 2009). In addition, the investors need to be conversant with the financial statement ...

Market risk is the uncertainty in the returns that an investor has in the market due to macro-economic factors that cut across all the assets in the market. Market risk can also be defined as the likely-hood of an investor to incur losses in the portfolio he holds in the market that is caused by the factors that affect the financial markets performance. Market risks have an effect on the stock prices of shares and investments. Their occurrence cannot be ignored as it has far reaching effects on the investments of the people.

An example of a market risk is ...

Introduction

The United Kingdom (UK) is among the few nations in the world that has achieved the status of being a “great power”. One could succinctly describe a great power as a nation that has the ability to impose its influence across the globe, counting on strengths in the aspects of political, military and economic power. A great power usually finds classification between a first-order power like the United States of America (US) and a third-order power (regional power) like South Africa, Poland and South Korea (Louden, 2007, p.187). Thus, in speaking about the UK being a great power, one could possibly not help but ...

1. Define a MSA
A metropolitan statistical area refers to an urbanized area which may be a county or a group of counties containing diverse population of not less than 50000 people. This area is associated with commuting effects, high social and economic integration.

2. Interpret Figure 1 (using descriptions on A3) for growing cities.
The figure shows both the shrinking and the expanding cities in the metropolitan. It shows the was a high peak in respect to the population density was at the peak for the towns at the outskirts of the capital city in 1986.This figure therefore shows the ...

Question 1

The external environment greatly affects the operation of the Wall Mart. One of the external environments that have a significant impact on the business is the economic conditions. This is because the economy attributes to the expansion of the business. If the interest rates are high, it becomes extremely impossible for the business people to borrow from the banks resulting to expensive capital to borrow.

Favorable taxation rates determine whether expansion of the business. This is because if the taxation rates are favorable, it encourages hiring and the growth of the business which will later result to the expansion of ...

Abstract

This paper explores such questions as the determinants of demand and supply for coffee and what factors can lead to a change in equilibrium price and quantity. The availability of substitutes for this good is considered. The price elasticity of demand for coffee and the determinants for it are described. At the end of the paper the way of increasing revenue through a change in price is chosen, whether to increase the price to receive more in payment for each unit, or to decrease price to attract more consumers to switch to buying the good.

Demand and supply are two meanings ...

Discussion 1

Basing my argument on e-Activity trade agreement helps the U.S. economy. A trade agreement refers to a contractual consensus between two or more countries on the terms of trade that will exist between them. These agreements facilitate the formation of trade unions, and in most cases, tariffs taxes and trade pacts are loosened for all countries in the union. In the U.S, trade agreements will increase the flow of output because of low cost. In addition, the country will be exposed to a wide market subjected to low tariffs. Although the U.S will lose revenues because of low trade tariffs, it ...

Growth in output per capita and in population growth

According to the report published by the World Bank in 2012, the Gross Domestic Product (GDP) per capita growth in Saudi Arabia was estimated to 4.36 percent. However, in the third quarter of 2012, the GDP in this country expanded to 5.87 percent. This growth rate is according to the report released by the Saudi Arabia Monetary Agency. The growth is associated by the country’s 20 percent possession of world’s proven reserves of petroleum. On the other hand, the average yearly percentage change in the Saudi Arabia population as a result of surplus/deficit in the economy is estimated ...

1. How important is international trade to the U.S. economy? If the European euro were to increase in value (appreciate) in the foreign exchange market, would it be easier or harder for the French to sell their wine in the United States? Suppose you were planning a trip to Paris. How would appreciation of the euro change the dollar cost of your trip? .

International trade is important to United States’ economy. This is because just like any other country in the world, United States is deeply enmeshed in a global web of economic relationships that involves trading of goods and services. ...

The European Union did not begin, as many seem to think, as a diplomatic coalition of European states. Instead, the formation of the European Union was a practical financial decision, born from the changing face of the world after the end of the Cold War (Majone). The European Union is home to a wide variety of different people with different cultures; the purpose of the formation of the Union was not to homogenize the continent, but to form a coalition of independent states that worked together to counterbalance American economic and financial power, as well as the rising economic power of China (Dinan).

...

In small economies such as Ireland, the traded sector is normally the leading sector for any economic development. In any bid to resurrect the economy from the depression which we have recently experienced, all reforms are aimed to surge the private sector so that the population can be able sustain itself.

The government of Ireland in their efforts to resurrect the economy has been working with the IMF and the EU in making the progress on the European policy reforms including the banking union which is very critical to the European and global confidence. The government negotiated with the ...

Summary and evaluation of articles

The Sarbanes Oxley Act was intended to create sanity in management of corporations in the U.S. Ten years down the line, the Act has been appreciated for its successful approach in creating a state of accountability in the management of companies. Today, the citizenry and investor organizations trust corporate governance reports and statements. According to authors of the Sarbanes Oxley Act implications, changes have been witnessed in the management and the degree of independence of both auditors and the board of directors. These changes are expected to occasion a consequential improvement in the way corporations are led. In addition, the financial ...

The National Atlantic Treaty Organization (NATO) was created when a treaty was signed in 1949 by all the Allies except for the Soviet Union after World War II. That means that approximately 65 years after WWII ended and thirteen years after the end of the Cold War NATO is still active. The NATO website states that there were three main reasons for creating NATO. One reason was to build an organization of countries that could rely on each other to work together against any threat from the Soviet Union. The second reason mentioned was to get a North American presence in ...

Abstract

This paper has identified articles in www.munKNEE.com by, Lorimer Wilson. It has analyzed the same and presented out the findings. First it presents the general economic principles associated with the article; this is followed by identification of the macroeconomic indices which are also examined into details. A discussion of the indices is followed by possible decisions or forecast that could done under each scenarios.

According to www.munKNEE.com by Loimer, some of the general economic that would relate to the article include but not limited to;
a) The Phillips curve; the higher the rate of unemployment the higher is the ...

Has religion been marginalized from the public and civic spheres?

According to laws, the lawmakers of our country have been discouraged from passing amendments that concern religion .This is seen in the first amendment which states that the congress shall make no law respecting an establishment on religion ,or prohibit the free exercise thereof (Novak 304). President Jefferson shows that the state and the church were intended to be separate bodies. Although it is not written in the constitution it carries a lot of weight in that it declared that the American government would not have a national church.
This is a direct indication that religion has been marginalized. At this ...

The increased rate of terrorism in the world in the 21^st century has not only threatened the world but shaken it. The terrorist attacks have continued to cause untold suffering to innocent people besides destabilizing legitimately elected governments. Economic growth and development in a country thrives, and blossoms in a very peaceful environment.

The United States of America has had the worst experience involving the terrorist attacks. The U.S Marine Corps were bombed in 1983 by a suicide bomber who rammed an explosive laded truck in the barracks. The prominent organizations in the world that runs the terrorism activities ...