BBA 4301, International Finance 1

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BBA 4301, International Finance 1

BBA 4301, International Finance 1

Course Learning Outcomes for Unit IV
Upon completion of this unit, students should be able to:
6. Discuss how governments control the flow of currencies across borders, including international
investments.
6.1 Assess foreign currency futures, forward contracts, valuation, and buying and writing options.
6.2 Evaluate interest rate risk and swaps and demonstrate their management.
6.3 Assess technical analysis, forecasting, and the combination approach to exchange rate
determination.
Reading Assignment
Chapter 7: Foreign Currency Derivatives and Swaps
Chapter 8: Foreign Exchange Rate Determination
Unit Lesson
Labels and methods of currency valuation vary across international borders (Moffett, Stonehill, & Eiteman,
2015). For example, Mexico’s medium of exchange is known as the peso, and Switzerland’s medium of
exchange is identified as the franc. However, not all mediums of exchange involve currencies. Other mediums
include assets, such as stocks or bonds. These mediums are commonly referred to as derivatives. Financial
tools, such as derivatives, play a prominent role in multinational business operations and contracts.
Types of derivatives include foreign currency futures, currency options, option pricing and valuation, interest
rate risk, and interest rate derivatives (Moffett et al., 2015). These investments or alternative instruments carry
risks but can also be very lucrative opportunities. However, market participation requires a knowledgeable
approach.
Foreign currency futures center on providing a future exchange rate for a fixed time, place, and price. More
importantly, foreign currency futures’ conditions are based by the exchange on which futures are traded.
Components of foreign currency futures include the contract size, stating the method of exchange rates,
maturity date, last trading day, collateral and maintenance margins, settlement, commissions, and use of a
clearinghouse.
Currency options are established by an agreement allowing the purchaser an opportunity to buy or sell
currency at a set price per unit for a specified timeframe. Currency options are comprised of three elements:
exercise price, premium, and spot exchange rate. The use of currency options is a growing practice of foreign
exchange activity.
Option pricing and valuation combine currency options into intrinsic and time value. The options are nonbinding.
Option pricing and valuation utilize a combination of six elements, including present spot rate, time to
maturity, forward rate for matching maturity, U.S. dollar interest rate, foreign currency interest rate, and
volatility. An analysis of option pricing leads to the complete value equal to the intrinsic value and time value.
Interest rate risk involves fluctuation of rates that make all firms sensitive to the uncertainty. Debt service is
considered the largest risk for nonfinancial firms while the MNE risk increases with multicurrency dimensions.
Therefore, interest rates derivatives, such as swaps and interest rate futures, are alternatives applied in many
transactions to minimize risk.
UNIT IV STUDY GUIDE
Foreign Currency Derivatives and Swaps and
the Foreign Exchange Rate Determination
BBA 4301, International Finance 2
UNIT x STUDY GUIDE
Title
Market participation is predicated upon the established foreign exchange rate. The determination of the rate
includes parity conditions, asset approach, and balance of payments (Moffett et al., 2015). The rate is a
reflection of external and internal forces such as infrastructure weaknesses and foreign-political risks. For
example, the alleged ISIS militant group in Syria became a dominant market-influencing factor that
heightened tension in the 2014 political climate (Huddleston, 2014).
As indicated in Unit III, purchasing power parity is a well-established framework for determining rates. This
framework includes the law of one price, absolute purchasing power parity, and relative purchasing power
parity (Moffett et al., 2015).
The law of one price suggests that similar goods are sold for the same price in different markets after the
conversion of currency. For example, continuing on within the vein of climate tension of the ISIS militant group
was their control and disruption of oil prices. Rates differed from region to region. Oil Prices in the Middle East
were higher, while North America benefited from somewhat lower prices (Dowd, 2014). However, after the
consideration and exclusion of these events, a price analysis should reveal a similar market rate of oil.
Absolute purchasing power parity concepts assert that the exchange rate mirrors the ratio price points
between two countries. For example, the U.S. wireless service and advisory leader for
PricewaterhouseCoopers reports that the cost of an Apple iPhone is virtually the same in the U.S., Germany,
and Japan (Yamshon, 2013). Therefore, once the exchange rate is excluded, prices should be same.
Relative purchasing power parity, considered the most significant, suggests change drives rates and prices.
For example, research indicates that as life spans increase, consumers are becoming more conscientious of
health benefits from daily exercise (Gleick, 2004). Therefore, demand for sports and energy drinks as well as
bottled water is increasing. The relative purchasing power parity suggests the change in demand for bottled
water impacts the cost-per-unit per country. Hence, the percentage change in price is equivalent to the
difference in the rates.
The balance of payments approach argues that the equilibrium exchange rate is found when the net inflow
matches outflow from financial activities. The country of India has a strong presence in the computer software
and service industry. Therefore, if Wal-Mart (U.S. company) purchases $1 million of India’s software
packages, there is a parallel entry of money exchange to the Indian producer.
The asset approach maintains that rates are determined by supply and demand for financial assets (Moffett et
al., 2015). Furthermore, this approach facilitates the assumption that foreign investment hinges on a variety of
market forces and considerations. However, accuracy in forecasting exchange rate values is limited.
Therefore, technical analysis requires assessing trends in pricing.
A knowledge base of foreign exchange theory and markets in conjunction with foreign exchange rates is
beneficial. The knowledge base aids in risk management naturally associated with international investments.
Risk management provides alternatives.
References
Dowd, J. (2014). ISIS and oil prices. Retrieved from https://www.fidelity.com/viewpoints/investing-ideas/ISISand-oil-supply
Gleick, P. H. (2004). The myth and reality of bottle water. In The world’s water, the biennial report on
freshwater resources: 2004-2005. Retrieved from http://pacinst.org/wpcontent/uploads/sites/21/2013/04/myth_and_reality.pdf
Huddleston, T. (2014). Big sell-off on Wall Street as fears of global crisis weigh. Retrieved from
http://fortune.com/2014/10/01/dow-jones-down-market-sell-off-october/
Moffett, M. H., Stonehill, A. I., & Eiteman, D. K. (2015). Fundamentals of multinational finance (5th ed.).
Boston, MA: Pearson Education.
Yamshon. L. (2013). No, U.S. Smartphone costs aren’t highest in the world. Retrieved from
http://www.techhive.com/article/2046003/no-u-s-smartphone-costs-arent-highest-in-the-world.html

Unit IV Course Project Country Analysis: Essay

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Unit IV Course Project

Country Analysis: Essay
Utilizing CSU Online Library, research the business and country selected in Unit I. Then, go to https://www.cia.gov/library/publications/the-world-factbook for additional research of facts and data.
Prepare a Word document of the general background information regarding the country selected (e.g., surplus, deficits, crisis, and potential corruption of the country, with more emphasis on recent events). In a minimum of 500 words, be sure to include the following:

  1. country’s currency structure;
  2. institutional factors including size of the economy and domestic investor base, which may lead to success or high risk in your venture of business expansion to that region; and
  3. flexibility of exchange rate regimes.

Use your textbook plus an additional 3 sources as references to support your submission. All paraphrased and quoted material must have accompanying citations.

 

Create a Gantt Chart for the following project, and show the Gantt Chart below

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  1. Create a Gantt Chart for the following project, and show the Gantt Chart below. Set a start date of September 1, 2018.  Assume that work can be done 5 days per week, with no work done on Saturdays or Sundays.  Identify the Critical Path.  When will the project be completed?
Task Number Activity Immediate Precedence Task Duration (Days)
1. Strategic Planning Phase none 20
2. Team Orientation 1 28
3. Software Configuration 2 60
4. Testing 3 20
5. Training 2 10
6. Facility Modification 1 45

 

Compare two artists: one artist should be from China and the other should be from a western country

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Compare two artists: one artist should be from China and the other should be from a western country. Describe their differences and provide examples of their work, try to use the same art period. Your paper should be 6 pages in length. Try to use your own words as much as possible and avoid cutting and copying irrelevant information from the internet.

Identify patients in the table below who could serve as matched controls for the highlighted cases

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Identify patients in the table below who could serve as matched controls for the highlighted cases.  Blanks indicate that the patient did not experience a fall in the time period.  Select controls based on the lowest random number.  Match on age.  Show your calculations.

Patient ID Received Intervention Age Months to Fall Random Number
Observation Period Follow-up Period
1 Yes 64   3 0.24
2 No 62   2 0.46
3 Yes 81 2   0.64
4 No 74 4   0.88
5 No 78   0.07
6 No 63 3   0.19

 

A major flaw in any organization is the passivity of the members. Ames, Hansen, Pollard, Snowden, and Manning did not exist in a vacuum

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A major flaw in any organization is the passivity of the members. Ames, Hansen, Pollard, Snowden, and Manning did not exist in a vacuum – others saw potential problems, but almost no one reported them.

Search the internet for a real world security concern – or go here (http://tinyurl.com/ncbe5o) or here (http://www.slate.com/id/2293623/) – since this is not a search exercise.

Determine if there is a potential problem – select an avenue to address your concern  – and post OR send me a 1 page (100 word)  reflection of what/who you would inform, what you found, what threats and vulnerabilities you determined were potentially present and who/whom you reported it to.

(Solved)Drug Treatment for ADHD

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 hyperactivity disorder (ADHD)

Drug Treatment for ADHD

Attention deficit hyperactivity disorder (ADHD) has received a lot of media coverage in the past ten years. One of the things most misunderstood about the disorder is the treatment. Children (and adults) afflicted with ADHD are often treated with stimulant drugs. Parents are often hesitant about giving their children these stimulant medications. Treating hyperactivity with a drug that increases activity appears paradoxical.

Using the Argosy University online library resources, find at least two peer-reviewed journal articles that explain the effect of stimulant drugs (such as Adderall or Ritalin—amphetamine or methylphenidate) on the brains of those with ADHD.

Assess the role U.S. government agencies have played in supporting the use of renewable energy sources, and conclude one

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Please respond to the following:According to the text, there are several renewable energy sources that could reduce dependence on fossil fuels and nuclear power. Assess the role U.S. government agencies have played in supporting the use of renewable energy sources, and conclude one (1) potential health risk associated with the use of a renewable source of energy that the government would need to address. Justify your response with a specific example.

Read the Understanding Fourth Generation (Links to an external site.)Links to an external site. War blog post.

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This week, we focus on the idea of “grand strategy.” Grand strategy refers to the general strategies developed by nation-states—countries like the United States, France, or Australia, for example—to survive and even thrive in the international community. In short, the leadership of every country follows some sort of general plan, which might include the acquisition of natural resources, the defense of a certain region, maintaining a strong military, engaging in diplomacy, or building public works. These plans are not always spelled out, but are rather evolving understandings that reflect the thinking of those in power.

In this discussion, you will read Understanding Fourth Generation War (Links to an external site.)Links to an external site. by William S. Lind, noted author of security studies. This piece was written in 2004, just after the United States invaded Iraq. By this time, the United States was also deeply entrenched in a war in Afghanistan, as well. Lind lays out four different grand strategies for protecting state interests via warfare. Significantly, he argues that we are in the Fourth Generation of warfare, which entails a number of conceptual shifts from dated conceptions of warfare, such as the importance of non-state forces like al-Qaeda and increased importance given to culture.

Here, then, you are asked to respond to two questions about these Generations of warfare, as a way of considering grand strategy broadly, and in the context of the United States.

To do so, complete the following steps:

  1. Read the Understanding Fourth Generation (Links to an external site.)Links to an external site. War blog post.
  2. First, in one paragraph, determine which of the Four Generations of warfare you believe are the most ethical, and why? In addressing this question, you may utilize your own personal ethical code, or refer to ethical codes encountered elsewhere in the course. Be sure to explain why the methods and aims of the Generation you have chosen is, indeed, the most ethical.
  3. Second, in one paragraph, select one attribute of Fourth Generation warfare that you believe will be crucial in future conflicts, then explain why you have made this selection. In other words, identify one Fourth Generation tactic that will increase in importance in future conflicts, and explain why this tactic will be so vital.

Your initial post should be at least 250 words in length. Support your claims with examples from required material(s) and/or scholarly sources.