BAFI1018 S2 2021 Final Assessment
Marks: 40%
Due Date: The assignment will be released at 1pm on Monday 25 October 2021 (Melbourne Time)
and is due by 1pm on Monday 1 November 2021 (Melbourne Time). You will be given 7 days to
complete the assignment.
Word Count: 1500 words
You work for firm XYZ situated in Britain, and your boss has become concerned about the
cu
ent economic environment, especially as it is related to the different types of exposures that
your firm may face in the near future. You are asked to provide a report, which evaluates how
your firm is exposed, the risk management implications for your firm, and possible hedging
strategies. You are also required to provide a recommendation for what your firm should do.
Information about Firm XYZ:
1. The firm imports high quality wool to Britain from foreign suppliers located in Australia
and the New Zealand.
2. The firm exports Jewellery to USA from Britain.
3. The firm exports designer clothes from Britain to Australia, New Zealand and Singapore.
4. The firm has a payment of 8,000,000 AUD due in 3 months to their supplier in Australia,
a payment of 6,000,000 NZD due in 2 months to their supplier in New Zealand.
5. The firm is due to receive 9,000,000 AUD from their customer in Australia in 2 months,
4,000,000NZD from their customer in New Zealand in 2 months, 700,000 SGD from their
customer in Singapore in 1 months, and 9,000,000 USD from their customer in USA in 2
months
6. The firm is concerned with the impacts of the potential high inflation rate due to the recent
expansionary monetary policy globally in their exporting and importing business
You are required to prepare a report, which should contain the following information:
1. Use the information above to consider the types of exposure your firm may face.
2. Discuss the firm’s risk management implications given their exposure and design hedging
strategies for the firm. You also need to evaluate the hedging outcome – what will the outcome
e if exposure is hedged and what will the outcome be if exposure is not hedged.
3. You should consider the effect of the cu
ent economic environment on foreign exchange
market, demand for exports/imports, supply of exports/imports and other relevant economic
indicators, and relate this to how this may impact the firm. Particularly, you need to discuss the
potential impacts of high inflation in the relevant countries for the firm on the firm’s exporting
and importing business
Allocation of Marks
The assignment accounts for 40% (a total of 40 marks) of students’ final grade for BAFI1018
International Finance. Marks will be allocated as follows:
1. Exposure and risk management (10 marks)
Marks will be awarded based on your understanding of different types of exposure related
to this firm and on your understanding of the importance of risk management and the
available risk management measures including potential hedging strategies
2. Discussion of the impact of economic environment (5 marks)
Marks will be awarded based on your understanding of the impact of the cu
ent
economic environment and your ability to relate this to how this may affect the firm.
3. Design of hedging strategies (10 marks)
Marks will be awarded based on the relevance, the effectiveness and the cost of the
proposed hedging strategies
4. Hedging outcome (10 marks)
Marks will be awarded based on your calculation and evaluation of the outcome if the
company’s exposure is hedged using the proposed strategies as well as the outcome if the
company’s exposure is not hedged.
5. Communication (5 marks)
Marks will be awarded based on how well the report communicates analysis, arguments
and viewpoints and how well the report is written. Students are expected to provide accurate
and complete citation and referencing where necessary.
General Instructions
• This is an individual assessment task.
• Each student is required to submit a project report, including all the supporting analysis
and materials by the due date. The report should be no longer than 1500 words
(excluding reference, tables and appendices). Citation and referencing should be
provided where necessary. Students should follow the Harvard referencing style.
• All report submissions must be made electronically to Turnitin. The report must be
using 1.5 or 2.0 spacing and 12 point Times New Roman font.
• Unless extension is granted, severe penalties apply for late submission (please refer to
the course outline for details).
Final Assessment Ru
ic (Total weighting: 40%)
1. Exposure and risk management (10 marks)
2. Discussion of the impact of economic environment (5 marks)
3. Design of hedging strategies (10 marks)
4. Hedging outcome (10 marks)
5. Communication (5 marks)
Project High Distinction
(80-100%)
Distinction
(70-79%)
Credit
(60-69%)
Pass
(50-59%)
Fail
(0-49%)
Exposure (10 marks)
Marks will be awarded based on your
understanding of different types of exposure
elated to this firm and on your
understanding of the importance of risk
management and the available risk
management measures including potential
hedging strategies
Excellent
understanding of
different types of
exposure related
to this firm, the
importance of risk
management and
the available risk
management
measures
including
potential hedging
strategies
Very good
understanding of
different types of
exposure related
to this firm, the
importance of risk
management and
the available risk
management
measures
including
potential hedging
strategies
Good
understanding of
different types of
exposure related
to this firm, the
importance of risk
management and
the available risk
management
measures
including
potential hedging
strategies
Some
understanding
of different types
of exposure
elated to this
firm, the
importance of
isk
management
and the
available risk
management
measures
including
potential
hedging
strategies
Poor or no
understanding of
different types of
exposure related
to this firm, the
importance of
isk management
and the
available risk
management
measures
including
potential
hedging
strategies
Discussion of the impact of economic
environment (5 marks)
Excellent
understanding of
Very good
understanding of
Good
understanding of
Some
understanding
Poor or no
understanding of
Marks will be awarded based on your
understanding of the impact of the cu
ent
economic environment and your ability to
elate this to how this may affect the firm.
the impact of the
cu
ent economic
environment and
excellent ability
to relate this to
how this may
affect the firm.
the impact of the
cu
ent economic
environment and
very good ability
to relate this to
how this may
affect the firm.
the impact of the
cu
ent economic
environment and
good ability to
elate this to how
this may affect the
firm.
of the impact of
the cu
ent
economic
environment and
some ability to
elate this to
how this may
affect the firm.
the impact of the
cu
ent
economic
environment and
poor to no
ability to relate
this to how this
may affect the
firm.
Design of hedging strategies (10 marks)
Marks will be awarded based on the
elevance, the effectiveness and the cost of
the proposed hedging strategies
Excellent
strategies in
terms of their
elevance,
effectiveness and
cost
Very good
strategies in
terms of their
elevance,
effectiveness and
cost
Good strategies
in terms of their
elevance,
effectiveness and
cost
Fair strategies
in terms of their
elevance,
effectiveness
and cost
Poor strategies
in terms of their
elevance,
effectiveness and
cost
Hedging outcome (10 marks)
Marks will be awarded based on calculation
and evaluation of the outcome if the
company’s exposure is hedged using the
proposed strategies as well as the outcome
if the company’s exposure is not hedged.
Excellent
calculation and
evaluation of the
outcome if the
company’s
exposure is
hedged using the
proposed
strategies and the
outcome if the
company’s
exposure is not
hedged.
Very good
calculation and
evaluation of the
outcome if the
company’s
exposure is
hedged using the
proposed
strategies and the
outcome if the
company’s
exposure is not
hedged.
Good calculation
and evaluation of
the outcome if the
company’s
exposure is
hedged using the
proposed
strategies and the
outcome if the
company’s
exposure is not
hedged.
Fair calculation
and evaluation
of the outcome if
the company’s
exposure is
hedged using the
proposed
strategies and
the outcome if
the company’s
exposure is not
hedged.
Poor calculation
and evaluation
of the outcome if
the company’s
exposure is
hedged using the
proposed
strategies and
the outcome if
the company’s
exposure is not
hedged.
Communication (5 marks)
Marks will be awarded based on how well
the report communicates analysis,
The report shows
excellent
communication
and writing skills,
The report shows
very good
communication
and writing skills,
The report shows
good
communication
and writing skills,
The report
shows fair
communication
and writing
The report
shows poor
communication
and writing
arguments and viewpoints and how well the
eport is written. Students are expected to
provide accurate and complete citation and
eferencing where necessary.
minimal
grammatical and
spelling e
ors,
and complete and
accurate citation
and referencing.
occasional
grammatical and
spelling e
ors,
and complete and
accurate citation
and referencing.
some
grammatical and
spelling e
ors,
and generally
complete and
accurate citation
and referencing.
skills, frequent
grammatical
and spelling
e
ors, and
generally
complete and
accurate
citation and
eferencing.
skills, very
frequent
grammatical and
spelling e
ors,
and incomplete
and/or
inaccurate