Format
The whole project should not be more than 4-5 pages long, single-spaced.
Page 1
First paragraph =
Your name.
I selected _ currency.
I predicted it would … appreciate (go up) OR depreciate (go down) relative to the US dollar.
My strategy was to … go long (buy foreign currency) OR go short (borrow foreign currency).
My prediction (position) was correct/incorrect.
Second paragraph =
Modern/recent history of the currency you selected. Brief characteristic of the country’s economy, including its GDP per capita and its main exports. (About ½ page).
Third paragraph =
Your reasoning for taking a long or a short position in trading this currency.
Page 2
Table - that shows daily currency exchange rate against the dollar for the time period.
Graph - that shows daily currency exchange rate against the dollar for the time period. The graph should match the Table.
Page 3
Total gain/loss in USD (show calculations)
Annualized return (use ARR formula and show calculations)
Commentary about behavior of your currency during the project period. (Max of ½ page)
Page 4
Hedging - Forward contract
What was the cost? (Show all your calculations.)
Was it a good decision to use the forward contract? Why or why not? (1-2 paragraphs)
Tutorial
A Tutorial on FOREX topics is provided in a separate document. It contains Module 2 lecture material, explanations, formulas, and examples. Read the first page of this document to make sure you understand how to make a currency selection at the start of the FOREX project. Consult the tutorial if needed while completing the FOREX project.
Use these Sources
Ch. 10 of the text and Module 2 materias (Week 1).
Samples of previous FOREX projects and hedging are posted in the section below in Blackboard. (Note - there have been changes to the exact requirements of projects over the years. These samples are for reference only. Follow the directions above!)
Online Sources:.
Pacific Exchange Rate Service
The Wall Street Journal currency markets section
Yahoo Finance - Currencies
World Currency Symbols
Purpose:
This assignment will support you in demonstrating mastery of the following module level objectives. Please refer back to the textbook readings, linked materials, and instructor content for support :
Modules 1 and 2:
Analyze the extent of global trade, investment, and human migration. (CO1)
Estimate related metrics of global exposure for national economies and individual firms.(CO1)
Explain the main principles of foreign exchange (FX) determination and operation of foreign currency markets. (CO3)
Identify basic approaches to FX hedging and speculation. (CO3)
Apply knowledge of FX hedging in problem-solving exercises. (CO3)
Modules 2 and 3:
Evaluate the role of international trade agreements. (CO4)
Analyze FDI (foreign direct investment) and foreign portfolio investment (FPI) and their allocation across countries and regions of the world. (CO5)
Evaluate emerging market economies, such as China, India, Brazil, or Russia. (CO7)
Analyze short-term and medium and long-term forecasts of the global economy, including “scenario-based” forecasts. (CO7)