International Monetary System and Currency Risk Management

 students are expected to research on a particular country’s unregulated financial system and the possible impact on the international financial landscape. The emphasis is on presenting the relevant arguments on the potency of an impending crisis if regulation is not imposed.
students are expected to devise a currency hedging strategy for a particular firm using derivatives. The emphasis is on quantitative skills and the mechanics of the different contracts.
Question 1 (20 marks)
Define China’s shadow banking system and the threats it poses to China’s domestic economy. Also present arguments why this may or may not trigger a worldwide crisis.
[4 + 8 + 8 = 20 marks]
Students are required to answer between 1000 and 1500 words. Please provide the word count. There should be a minimum of 5 references.
Question 2 (10 marks)
Ace plc produces drill bits for gold mining equipment. A German customer is contracted to pay Ace plc 8.5 million euros in six months’ time. The top management of the company is thinking whether or not to hedge this foreign currency receipt, and if so, which method would be optimal. Some executives believe the exchange rate will be GBP1= EUR 1.37 when payment is due from the customer. Other executives think the exchange rate will be GBP1= EUR 1.43. The alternatives available to Ace plc are as follows:
i. Forward contract hedge: Spot GBP/EUR Bid 1.4010 – Offer 1.4132
6 month forward points: 95/85
18
ii. Currency option hedge
Call option available: Strike GBP/EUR 1.4200 at premium GBP 1.20 per EUR100
Put option available: Strike GBP/EUR 1.4180 at premium GBP 1.00 per EUR100
iii. Money market hedge
Bid Offer
Europe interest rates 2.75% 3.00%
UK interest rates 6.20% 6.60%
The bank charges an administrative fee of 0.5% on the final receipt.
iv. To do nothing.
Required:
(a) Calculate the net receipt in GBP under each of the four alternatives assuming the
exchange rate in six months are:
i. GBP1= EUR 1.37
ii. GBP1= EUR 1.43 [6 marks]
(b) Based on your answer in part a above, make a reasoned recommendation on which
alternative is optimal. [4 marks]

Are you looking for a similar paper or any other quality academic essay? Then look no further. Our research paper writing service is what you require. Our team of experienced writers is on standby to deliver to you an original paper as per your specified instructions with zero plagiarism guaranteed. This is the perfect way you can prepare your own unique academic paper and score the grades you deserve.

Use the order calculator below and get ordering with idealtermpapers.com now! Contact our live support team for any assistance or inquiry.

Type of paper Academic level Subject area
Number of pages Paper urgency Cost per page:
 Total:

Purchase Guarantee

Why ORDER at IdealTermPapers.com?

  • Educated and experienced writers.
  • Quality, Professionalism and experience.
  • Original Content writing.
  • Best customer support.
  • Affordable Pricing on orders.
  • Thorough research.
  • Ontime delivery of finished work.
  • 100% plagiarism free papers.

Reasonable Prices

  • To get the best quality papers isn’t cheap so don’t trust extremely low prices.
  • We can’t claim that we have unreasonably low prices because low prices equal to low quality.
  • Our prices are good and they balance with the quality of our work.
  • We have a Moneyback guarantee.

Original and Quality work

  • Our writers are professionals and they write your paper from scratch and we don’t encourage copy pasting.
  • All writers are assessed and they have to pass our standards for them to work with us.
  • Plagiarism is an offence and it’s never tolerated in our company.

Native Writers plus Researchers

  • Our writers are qualified and excellent and will guarantee the best performance in your order.
  • Our team has writers who have master's and PhD qualifications who can handle any assignment
  • We have the best standards in essay writing.

We have been in business for over 7 syears

  • We have always served our customers from all over the world and they have continued to order with us.
  • We value our customers since they have trusted us to do their assignments.
  • We are competent in our writing gained from experience over the years
  • Our company has 24/7 Live Support.

You will get

  •  Custom Admission Essay written by competent professional English writers.
  •  Free revisions according to our revision policy if required
  •  Paper format:  275 words per page, Times New Roman font and size 12, doublespaced text and1 inch margin
  •  On time delivery and direct order download
  •  Privacy guaranteed

We can help you:

  •  acquire a comprehensive professional presentation.
  •  get a unique and remarkable content as per your instructions.
  •  Get an additional portion that can be included to your existing presentation;
  •  turn your work in to an eyecatching presentation with well communicated ideas.
  •  improve your presentation to acquire the best professional standards.