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Plot the collected FX data on a graph showing the daily movements
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Plot the collected FX data on a graph showing the daily movements
Figure 1: Daily FX exchange rates for different currencies
Select three currencies (from the given) and find the significant movements of FX rates during the period and explain possible reasons for those movements (you are required to cite all your information sources).
The selected currencies are US dollar, UK Pound, and Chinese Yuan. To start with, the US Dollar has shown a tremendous increase within the period of between July 1 2010 and July 1, 2012. As shown in figure 1, the rate was low in July 2010 but increased with a very high rate to June 2012. The AUD and USD exchange rate shows the relationship between toe currencies in respect to daily FX exchange rates. The USD exchange rate appreciated by 0.14% during the first 100 days from July 2010. The FX rate averaged 1.1in July 2011 and showed a low record of 0.48 in April 2012. The upward move was driven mainly by the AUD weakness when the minutes of most reserve banks in Australia were released. The bank’s committee anticipated the Australian economic growth that went below the normal trend increasing the daily value of the US dollar. This made RBA investors to cut domestic interest rates in late 2012 (ADB (Federal Reserve 2013).
On the other hand, the UK Pound showed a good relationship with the AUD over the two years period. The UK interest rates rise relatively because of the stable economy experienced in the country. The high interest rates charged on good in UK in between January and June 2012 lead to currency depreciation forcing the Australian dollar to overtake UK pound. The United Kingdom accepted majority recommendations introduced by the independent commission on banking. One of the recommendation included increasing capital requirements in order to save commercial banks from wholesale banking groups. The UK pound accelerated by 0.12% between the July 2010 and December 2011. On the other hand, the global equity prices fell by 9% in 2011 across all currencies causing a balanced exchange between UK pound and Australian dollar (Asian Development Bank 2013).
Finally, the Australian dollar and the Chinese Yuan showed an interesting relationship during the two years period. The Chinese Yuan showed a little bit of success over the Australian dollar in terms of interest rates because the currency was not much affected by inflation. China kept stabilizing its economy between December 2010 and June 2012 that made its currency to shoot. On the other hand, Australia invited many investors to its location who contributed more to its economic expansion. The main reason for introducing investors was to fight back into Chinese Yuan that has dominated most assets in the country. Australia introduced more than 150,000 new jobs that made its economy to increase by 1.6% by 1 June 2012.
Assume that you have invested AUD 1,000,000 in each country on 1st July 2012. Estimate the AUD value of each investment as at 30th September 2012, 31st December 2012, 31st March 2013 and 30 June 2013. Explain how the foreign exchange rates affected to change the value of those investments. Are there any other factors which can affect to the AUD value of those investments? Suggest possible strategies that investors can use to reduce the possibility of unfavorable value changes on foreign exchange rate change.
The amount invested in each country is AUD 1,000,000 on 1st July 2012. Table 1 shows the respective estimated AUD value for each investment. The following formular will be used:
VI1 = PV(1 + I)t …….. (1)
Where, VI is the value of investment,
PV is the amount invested
I is the interest rate, and
t is the period of investment
for United States, I = 5% hence,
VI = 1000000(1+0.05)3/12
= 1,037,222.39
Country
US
(USD) Japan
(JPY) UK
(GPB) Thailand
(THB) China
(RMB) India
(INR)
30 sep 2012 1,037,222.39 1,022,188.28. 1,052,452.61 1,048,626.55. 1,022,188.28. 1,019,949.94.
31 Dec 2012 1,050,241.77. 1,040,012.13. 1,070,978.18. 1,065,759.20. 1,022,215.15 1,024,995.95
31 March 2012 1,102,787.04. 1,253,325.23 1,095,885.32 1,114,256.89 1,085,524.10 1,325,256.05
30 June 2012 1,236,145.02 1,258,856.36 1,125,552.41 1,365,895.00 1,124,114.30 1,589,968.36
Foreign exchange rates have a significant impact on the value of investment in each country. A stable interest rate is responsible for attracting a uniform investment any amount of money in any country. On the other hand, the international trades for example, influence the currency interest rates that in return affect the amount of investment a person makes. For example, countries relying on exports find their products very competitive in the international markets due to fluctuation of exchange rates. Exchange rates have a direct effect on the realized return on investment. A person owning a stock in a foreign country, for instance Japan, where local currency goes up by 10% within two months increases his value of investment by 10% irrespective of the stock price. On the other hand, balance of trade has an effect on the foreign exchange rate. Imports and exports are the major contributors to balances of trade and capital. The amount of interest rate charged in a country affects the exchange rate between the two countries leading to an effect on the value of investment (Agar 2005).
Other factors apart from foreign exchange rates also affect the amount of AUD on these investments. Firstly, the amount of interest charged on the investment affects the amount acquired at the end of a specified period. For instance, the person invested AUD 1,000,000 for a period of 2 months in US at an interest of 5% per annum. The value of interest affected the value of investment because the amount invested in US at an interest of 5% was lower than amount invested in UK at an interest of 7.5% p.a. Secondly; credit risks affect the value of investment after a given period. The value of investment depends on the credit quality and the ability to meet all the financial obligations of the invested country. Countries with low credit ratings offer higher yields to investors to cater for additional credit risks. In addition, a change in the country’s credit rating and marketing perceptions affect the value of outstanding investments (Damodaran 2002).
Investors can reduce the possibility of unfavorable value changes on foreign exchange rate change through the following means. To start with, a country needs to identify and measure the foreign exchange exposure that it can manage. The focus of a country should b on investment risks. For a country like US, the measure of exposure will involve determining the difference between the expected U.S. dollars to be received over the given period and the amount required to make payments. The difference determines the exposure of such country to value changes of foreign exchange rates that can be minimized to get more value on investments. Secondly, the country should develop a foreign exchange policy that helps in determining tools and instruments to be used under various circumstances. On the other hand, a country can split accounting in order to qualify for hedging.
Estimate the correlation coefficient for each pair of currency. What can you learn from the estimated correlation coefficients? Assume that you have engaged in export and import of finish goods and raw material from these countries. Explain, how can you use the estimated correlation coefficient to manage cash flow positions of your business
The correlation coefficient between each pair of currencies is shown below.
…………….(Forex Trading Zone 2013)
For AUD and USD,
r = (0.5-0.32)(0.7-0.55)/(0.0324*0.0225) = /0.027
= 0.13
Table 2 shows correlation for other pairs
Currency Correlation coefficient
US 0.13
JPY -0.2
GBP 0.52
THB 0.42
RMB 0.11
INR -0.5
Table 2: Correlation coefficient of UAD and other currencies
From the estimated correlations, it is clear that the value of correlation depends on the amount of foreign exchange rate of a currency. Currencies with negative correlation values have a high degree of negative correlation while those with positive values of correlation show that the data has reached a negative lock step. The following estimated value of correlations could be used in managing cash flow positions of a business. To start with, businesses introduce many international transactions that are generated by the ever-growing enterprises and countries. In order to manage such businesses effectively, it is recommended that all businesses be conducted using the home currency. When all customers are restricted to pay using same currency, it reduces risks of losses and the burden of currency fluctuations. In addition, those correlations with negative values should be avoided because they indicate unstable foreign exchange rates that can lead a business into losses. On the other hand, positive coefficients show a promising investing place but the manager should also consider the currency stability of that country before engaging in any business (Clarida, Davis & Pedersen 2009).
Based on the spot exchange rates on 1st July, 2012, estimate the expected exchange rates for USD, INR, RMB and MYR in six months and one year using the purchasing power parity (PPP) and the International Fischer Effect (IFE).
The purchasing power parity (PPP) relates a change in two countries expected inflation rates to change in exchange rates. PPP is calculated from the following formula:
S1/S0 = (1 + Iy) / (1 + Ix)
Where, S1 = the spot exchange rate at the end of time period
S0 = spot exchange rate at the beginning of time period
Iy = expected annual inflation rate of country Y
Ix = Expected annual inflation rate of country X.
From the formula, the expected exchange rates for US can be calculated as:
Six months S0.5 = (1.2) x 0.978 = 1.16.
One year S1 = 1.2 x 0.489 = 0.586
Table 3 shows estimates for other currencies.
Currency 6 months One year
US 1.16 0.58
JPY 1.25 0.23
GBP 2.3 0.33
THB 0.5 0.92
RMB 1.33 0.25
INR 2.55 1.00
Compare your estimated spot exchange rates with corresponding actual rates.
Explain why they are different to corresponding actual exchange rates
Comparing the estimated spot exchange rates and actual rates indicates a huge difference. The actual rates are higher than the estimated spot exchange rates. To start with the behavior of spot exchange rates shows that there was a random walk with a little drift. The monthly standard deviation of exchange rates between two currencies, AUD and USD was about 1.4% per month, and changes of more than 2% occurring in moderate frequencies. The changes in national price levels measured from consumer price indices contributed to the achieved differences. Secondly, there was a relationship between currency correlations and forward exchange rate for currencies maturing after one year. They indicated that spot and forward rates almost moved in the same direction and approximately same amount. Thirdly, the law of purchasing power parity requires a close correspondent between normal exchange rates and estimated exchange rates, but it was not the case. In a six months’ period, the different was huge enough to differ with this rule because of changes in consumer indices ratios (Dothan & Ramamurtie 2012).
Using your findings explain whether there were any possibility to make a profit on arbitrage or on speculations in the FX market during 2012/13.
From the above findings, there were very high possibilities of making profits on arbitrage in the FX market during 2012/2013. This is because the fluctuating foreign exchange gave investors an opportunity to invest in countries whose currencies were high and had no intention of dropping. In addition, the low interest rates charged in Australia gave investors a higher chance of acquiring more profits before the dollar destabilizes.
References list
ADB (Asian Development Bank). (2013). Asian Development Outlook 2013: Asia’s Energy
Challenge. Manila.
AGAR, C. (2005). Capital investment & financing a practical guide to financial evaluation.
Oxford: Elsevier Butterworth-Heinemann.
CLARIDA, R. H., DAVIS, J., & PEDERSEN, N. (2009). Currency carry trade regimes beyond
the fama regression. Cambridge, MA: National Bureau of Economic Research.
DAMODARAN, A. (2002). Investment valuation: tools and techniques for determining the
value of any asset (2nd ed.). New York: Wiley.
DOTHAN, M. U., & RAMAMURTIE, S. (2012). Applying economic restrictions to foreign
exchange rate dynamics: spot rates, futures, and options. Atlanta, Ga.: Federal Reserve Bank of Atlanta.
FEDERAL RESERVE. (2013). Price-adjusted Broad Dollar Index. Washington:
Federal Reserve.
FOREX TRADING ZONE. (2013). Correlation Between Currencies. Retrieved from:
http://www.forextradingzone.org/articles-Currency_Correlation
HISTORY FINAL EXAM
HISTORY FINAL EXAM
NAME:
DATE:
UNIVERSITY:
ESSAY 1
The historical significance of Malcolm X
He was a pioneer of the civil rights movement, minister, and Black Nationalist supporter. He encouraged his Black Americans to defend themselves “by all means” with white brutality, often contrasting with Martin Luther’s non-violent teachings. Malcolm X advocated for empowering Black people, oppressing Black people, separating Black and White Americans, and openly chastening the mainstream civil-rights movement to support non-violence and racial integration. He is best known as the nation’s spokesperson for his tenure.
The historical significance of the computer revolution.
It contributed significantly to the twenty-first-century development in computer technology in both hardware and software. Following the network revolution, ARPANET (Advanced Research Projects Agency Network) led to the emergence of the global internet. Computer technology in historically non-technical areas is the product of the computer revolution. They include agriculture, banking, and manufacturing. In finance, computers are used for data entry, retrieval, and storage.
The historical significance of the Equal Rights Amendment.
It gave all American citizens, regardless of gender, equal legal rights. It aims to eliminate legal disparities between men and women in divorce, land ownership, jobs, and other essential areas. It is a political and cultural manifestation in which many people have high hopes or deep reservations about the evolving status of women. The amendment secured women’s rights in the public sphere.
The historical significance of Barry Goldwater
He supported openly gay people who work in the military, environmental protection, abortion, and legalization. To win the Republican Prime Ministers in 1964, Goldwater rallied a solid conservative base. Despite being raised as an episcopal, Goldwater was the first Jewish presidential candidate to be nominated by a major American political party. He was admired for his honor and commitment to principles. Goldwater’s liberal views on social issues were cemented.
ESSAY 2
Introduction.
Cold War activities included the Soviet invasion of the Middle East and the U.S. support of every non-communist government. The Soviet Union had already had a poor deal with them because the U.S. refused to send them a nuclear weapon and because the U.S. had agreed to counter any further Soviet Union extension of the containment strategy, the advent of the Truman Doctrine used to help the non-Communist. Additional considerations include the end-of-World-War-II tension between the two countries, ideological competition between the US and the Soviet Union, nuclear weapons, and US communism paranoia (Kydd, 2018).The reason for all this was the intention of the Soviets and the Western Allies to exploit the mineral wealth of Germany. Another philosophy is that the U.S. and the Soviet Union did not like their political structures.
This had an effect on US foreign policy, leading the US to adopt a firm containment policy. Via fiscal, political, and military activities, the Soviet Union attempted to avoid the proliferation of Communism. The Marshall Plan, which cost about $13 billion, was designed to help in the battle against communism by introducing stability to Europe’s war-torn countries. Similarly, before the Soviet Union lifted the siege on West Berlin after the Battle of Berlin, the US flew over 2.5 million tons of supplies to West Berlin.
Owing to these events and philosophies, freedom of speech and freedom of the press has been suppressed out of fear of the spread of communism. There were various limitations on freedom of expression and the media during the Revolutionary War. Those loyal to the King of England—loyalists—were subject to a series of burdensome constraints on colonial officials. Some colonies have passed laws that declare the British King traitorous. Even after the U.S. proclaimed its independence from England, speech restrictions persisted. It is a great irony in history that many of the exact political figures who ratified the U.S. Constitution and the United States Charter of Rights (including the First Amendment) were the same leaders who passed the 1798 Sedition Act – a statute contrary to freedom of expression. The Law and its Alien Acts partner were a product of the times – a secret war with France. The 1798 Sedition Act criminalized the “reading, printing, uttering or publication of any fraudulent, scandalous and malicious writings or writings concerning the government of America.” The Federalist Party silenced newspaper editors from the Democratic Republic – men such as Matthew Lyon, Benjamin Bache and William Duane.
Attempts to halt the rise of communism in the United States affected the country’s residents. Following Truman, President Eisenhower took a hard line toward the Soviet Union and significantly increased the United States’ nuclear arsenal (Brooks, 2019). Since both sides possessed them, they helped discourage a possible military conflict, but their usage would result in violence and challenges to the Americans. The Kennedy and Johnson administrations called for a “flexible solution” to defeat communism, initiated a naval embargo against the danger of nuclear missiles, and supported the inability of Cuban exiled powers to depose Fidel Castro during the Cuban Missile Crisis. He sent forces to South Vietnam to combat communism.
Conclusion
This was a ten-year fight that wreaked havoc on the domestic scene in the United States. Containment was often applied in less obvious ways. “National security agencies have encouraged Hollywood to use anti-communist films as propaganda tools and have demanded that film scripts be revised to exclude references to dishonorable aspects of American history”. As a result, a slew of films were produced that fuelled patriotism and distrust of communist activity in the United States (Fearon, 2017). Americans believed it was their civic responsibility to support the economy by buying consumer products.
References
Kydd, A. H. (2018). Trust and mistrust in international relations. Princeton University Press.
Brooks, S. G., & Wohlforth, W. C. (2019). Power, globalization, and the end of the Cold War: Reevaluating a landmark case for ideas. International Security, 25(3), 5-53.
Fearon, J. D., Kasara, K., & Laitin, D. D. (2017). Ethnic minority rule and civil war onset. American Political science review, 101(1), 187-193.
ESSAY Part II
ESSAY Part II
Deadline:
Purposes:
To demonstrate an ability to write in a limited amount of time
To integrate information from diverse sources
Directions:
Please fill in the blanks of this integrative essay. Afterward, prepare a works-cited page of the five sources you have chosen to consult.
Quoted Passages
If you merely copy quotations from the sources and do not relate the quotations to the prompt, you will receive a grade of “ZERO” for this assignment.
Citing the Sources
Throughout the semester, I have included photocopies of book cover pages and versos (back sides). You will need this information to cite the sources. In instances when I have not included the information, I have attached it to your examination copy. This semester, however, I do believe that I attached documentation information to each of your sources.
The “Works Cited” PageAfter writing your essay, please include a “Works Cited” page of the five sources you have consulted for your essay. The “Works Cited” page should be numbered as the next page following your essay. If your essay ends on “Page 6,” the “Works Cited” page will be “Page 7.” Like the rest of the essay, the “Works Cited” page needs a running header.
The “Works Cited” page only requires five sources. Yet there will be a five-point penalty if an outside source is mentioned in the paragraph that is not mentioned on the works cited page.
Format:
–Quadruple spaced–12-point Arial font. I will accept other 12-point fonts, but I will not accept 11-point font.–Number the sentences continuously from “1” to “59.”–Include the running header “First Initial. Lastname #” on each page. The “#” refers to the page number. Your running header should appear as “L. Smith 1,” “L. Smith 2,” and so on.–Feel free to save this document in a word processing program so that you can use the current running header for your essay.–If you use this document, you must eliminate all the lines. There will be a format deduction for forgetting to eliminate the lines.SentencesMake sure that there are a total of 59 sentences, including the ones I furnish and the ones you furnish. If you go over or under, there will be a two-point deduction for every sentence over or under the number “59.”
Reminders
–Final Examination Part II will be graded for grammar, spelling, and punctuation.
–Remember not to use the words “get” and “you” anywhere in your extended paragraph. The first use of the word “get” is free. Each additional use leads to a Level I error. Each use of the word “you” leads to a Level II error. Hopefully, this reminder will help you avoid losing points needlessly.
The Lines–Please remove the lines before submitting your essay.
( BELOW) WE CAN COPY AND PASTE THE ENTIRE BODY AND FILL IN THE BLANKS TO START OUR ESSAY:
Final Exam Integrative Paragraph
[1] This semester, we read the following professional essays and/or viewed the following media as a class in the following order:
Matt Jenkins’ “Maya Gold”
“Farming Women—In Their Own Words”
“This Blessed Earth” (NPR Podcast)
Antonio Burciaga’s “Tortillas”
Bruce Mau’s “Urbanity, Revised: To Imagine the Future, We Must Rethink the Meaning of a City”
Kathianne Kowalski’s “Megacities with Mega Challenges.”
Dustin Roasa’s “Cities of the Future—Made in China”
Cynthia Gurney’s “Life with Loss,” Part I
“The United Nations Earth Charter”
Robert Draper’s “Why Photography Matters”
Chitra Divakaruni’s “Mrs. Dutta Writes a Letter”
[2] While reading or viewing five of these documents, I found that theyshared the common theme of adaptation. [3] The first essay or DVD to
discuss this theme is Chitra Divakaruni’s “Mrs. Dutta Writes a Letter.” [4]
This short story is about (summarize the entire short story in two and a half
sentences) ____________________________________________________________________________________________________________________________________________________________________.
[5] (Write a complete sentence to continue the summary.)
[6] (Write a complete sentence to end the summary.)
____________________________________________________________
___________________________________________________________.
[7] The first way the theme appears is _____________________________
[8] (Say more about the first way in which this theme appears.)
___________________________________________________________
___________________________________________________________.
[9] (Say more about the first way in which this theme appears.)
____________________________________________________________
___________________________________________________________.
[10] The second way the theme appears is _______________________
____________________________________________________________
[11] (Say more about the second way in which this theme appears.)
____________________________________________________________
___________________________________________________________.
[12] (Say more about the second way in which this theme appears.)
____________________________________________________________
[13] The second essay or DVD to discuss this theme is “The United
Nations Earth Charter.” [14] This essay or DVD is about (summarize the
entire essay or DVD in two and a half sentences) __________________
[15] (Write a complete sentence to continue the summary.)
[16] (Write a complete sentence to end the summary.)____________________________________________________________[17] The first way the theme appears is _______________________________________________________________________________________________________________________.
[18] (Say more about the first way in which this theme appears.)
____________________________________________________________
[19] (Say more about the first way in which this theme appears.)
____________________________________________________________
____________________________________________________________
[20] The second way the theme appears is _______________________
___________________________________________________________
[21] (Say more about the second way in which this theme appears.)
____________________________________________________________
____________________________________________________________
[22] (Say more about the second way in which this theme appears.)
____________________________________________________________
____________________________________________________________
[23] The third essay or DVD to discuss this theme is [include the full title
of the essay or DVD, the author’s first name, and the author’s last
name]
____________________________________________________________
___________________________________________________________.
[24] This essay or DVD is about (summarize the entire essay or DVD)
____________________________________________________________
___________________________________________________________.
[25] (Write a complete sentence to continue the summary.)
____________________________________________________________
____________________________________________________________
[26] (Write a complete sentence to end the summary.)
____________________________________________________________
____________________________________________________________
[27] The first way the theme appears is ___________________________
____________________________________________________________
[28] (Say more about the first way in which this theme appears.)
____________________________________________________________
____________________________________________________________
___________________________________________________________.
[29] (Say more about the first way in which this theme appears.)
____________________________________________________________
___________________________________________________________
[30] The second way the theme appears is_________________________
___________________________________________________________.
[31] (Say more about the second way in which this theme appears.)
____________________________________________________________
____________________________________________________________
[32] (Say more about the second way in which this theme appears.)
____________________________________________________________
____________________________________________________________
[33] The fourth essay or DVD to discuss this theme is [include the full title
of the essay or DVD, the author’s first name, and the author’s last
name]
____________________________________________________________
___________________________________________________________.
[34] This essay or DVD is about (summarize the entire essay or DVD)
____________________________________________________________
____________________________________________________________
___________________________________________________________.
[35] (Write a complete sentence to continue the summary.)
____________________________________________________________
____________________________________________________________
____________________________________________________________
[36] (Write a complete sentence to end the summary.)
____________________________________________________________
____________________________________________________________
____________________________________________________________
[37] The first way the theme appears is ___________________________
____________________________________________________________
___________________________________________________________.
[38] (Say more about the first way in which this theme appears.)
____________________________________________________________
____________________________________________________________
___________________________________________________________.
[39] (Say more about the first way in which this theme appears.)
____________________________________________________________
____________________________________________________________
___________________________________________________________
[40] The second way the theme appears is_________________________
____________________________________________________________
___________________________________________________________.
[41] (Say more about the second way in which this theme appears.)
___________________________________________________________
____________________________________________________________
____________________________________________________________
[42] (Say more about the second way in which this theme appears.)
____________________________________________________________
____________________________________________________________
____________________________________________________________
[43] The fifth essay or DVD to discuss this theme is [include the full title
of the essay or DVD, the author’s first name, and the author’s last
name]
____________________________________________________________
___________________________________________________________.
[44] This essay or DVD is about (summarize the entire essay or DVD)
____________________________________________________________
____________________________________________________________
___________________________________________________________.
[45] (Write a complete sentence to continue the summary.)
____________________________________________________________
____________________________________________________________
____________________________________________________________
[46] (Write a complete sentence to end the summary.)
____________________________________________________________
____________________________________________________________
____________________________________________________________
[47] The first way the theme appears is ____________________________
____________________________________________________________
___________________________________________________________.
[48] (Say more about the first way in which this theme appears.)
____________________________________________________________
____________________________________________________________
___________________________________________________________.
[49] (Say more about the first way in which this theme appears.)
____________________________________________________________
____________________________________________________________
___________________________________________________________
[50] The second way the theme appears is_________________________
____________________________________________________________
___________________________________________________________.
[51] (Say more about the second way in which this theme appears.)
___________________________________________________________
____________________________________________________________
____________________________________________________________
[52] (Say more about the second way in which this theme appears.)
____________________________________________________________
____________________________________________________________
____________________________________________________________
[53] This semester, I read five documents pertaining to the theme of
adaptation. [54] The first document deals with the theme because _____
___________________________________________________________
___________________________________________________________.
[55] The second document deals with the theme because _____________
___________________________________________________________
___________________________________________________________.
[56] The third document deals with the theme because _______________
___________________________________________________________
___________________________________________________________.
[57] The fourth document deals with the theme because _____________
___________________________________________________________
___________________________________________________________.
[58] The fifth document deals with the theme because _______________
___________________________________________________________
___________________________________________________________.
[59] (Write a concluding statement.)
____________________________________________________________
____________________________________________________________
___________________________________________________________.
[60] (If desired, you may write a second concluding statement. A secondconcluding statement, however, is not required.)
____________________________________________________________
____________________________________________________________
___________________________________________________________.
[Now prepare a works cited page of the five or more sources consulted for writing this
paragraph. For this portion of the examination, please use a running header
so I can accurately identify the author of the citation page.]