You are required to prepare a report, which should contain the following information:

1. List the future spot exchange rates (the currency pair and the relevant month) that directly affect your firm and form a forecast (a number is required) for each of these future spot exchange rates. You need to briefly analyze the factors affecting these exchange rates and then form your forecasts.

2. Discuss and evaluate the types of exposures your firm may face as well as the other main concerns for your firm. In your discussion, you should consider the effects of the current economic climate on the foreign exchange market and the competitiveness of the products produced in Australia and relate this to how these may impact the firm.

3. Design hedging strategies for the firm’s foreign currency exposures. You need to explain why your chosen hedging strategies are better than the other strategies by calculating and then evaluating the hedging outcomes – what will the outcomes be if exposures are hedged using your hedging strategies and what will the outcomes be if exposures are not hedged or using other hedging strategies. Please also discuss the impacts of hedging foreign currency exposures on the firm’s cost of capital and firm value.

4. You need to navigate the digital landscape and use appropriate digital tools, e.g., Refinitiv Workspace, to find relevant information and data to complete the tasks. You need to provide the sources of data used in your report.

Allocation of Marks The assignment accounts for 40% (a total of 40 marks) of students’ final grades for BAFI1018 International Finance. This assessment will measure your ability related to the following aspects:

• Analyse factors affecting the exchange rate and form your forecasts
• Evaluate the exposures
• Manage exposures and evaluate the risk management outcomes
• Provide solutions by utilizing and connecting a variety of relevant disciplinary tools and knowledge when solving problems
• Communication
• Digital Proficiency

General Instructions

• This is an individual assessment task. Each student should work independently on this assignment. Working together with other students on this assignment is not permitted.
• Each student is required to submit a project report, including all the supporting analysis and materials by the due date.
• The executive summary, reference list, tables, and appendices are excluded from the word count. Citation and referencing should be provided where necessary. Students should follow the Harvard referencing style.
• All report submissions must be made electronically on Canvas and checked by Turnitin. The report must be using 1.5 or 2.0 spacing and 12-point Times New Roman font.
• Unless an extension is granted, severe penalties apply for late submission (please refer to
the course guide for details).