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GROUP 2:
S A L A U A B D U L M A L I K O L A R I N O Y E
810115
810572
806340
813298
812395
ANSWER TO QUESTION A:
By using the exchange rate data from the supplemental
case problem of Part 3: Exchange Rate Risk
Management, we calculated the:
i. Percentage change in each exchange rate of year 1
till year 16 in order to determine the
expected(forecasted) spot rate for year 1 till year
16.
ii. Revenues from all countries (Australia, Canada,
New Zealand and British Pound) by multiplying
the number of foreign currency units to be received
as in the data of the previous case above (as shown
in the Table 1).
%change
Current spot
Australia
future
Historical
exchange
%change
Current
spot
Canada
future
Expected
amount
EXPF
Historical
%change
Current
spot
NEW ZEALAND
future
Expected
amount
EXPF
Year
Scenario
0.7671
38,000,000
0.9839
0.8625
35,000,000
1.0437
0.5985
33,000,000
Historical
Exchange
rate
% change
Current spot
BRITISH POUND
future
Expected amount
EXPF
Expected
total revenue
1.2571
2.0235
1.9382
34,000,000
1.0864
-0.1357887
0.7671
0.662936
38,000,000
25,191,586
0.9908
0.007013
0.8625
0.868549
35,000,000
30,399,202
0.95
-0.08978
0.5985
0.544769
33,000,000
17,977,364
1.7024
-0.15869
1.9382
1.630635869
34,000,000
55,441,620
129,009,772
1.1414
0.05062592
0.7671
0.805935
38,000,000
30,625,535
0.9137
-0.07782
0.8625
0.795384
35,000,000
27,838,432
1.0197
0.073368
0.5985
0.642411
33,000,000
21,199,563
1.906
0.119596
1.9382
2.170000705
34,000,000
73,780,024
153,443,555
1.1505
0.00797267
0.7671
0.773216
38,000,000
29,382,202
0.8432
-0.07716
0.8625
0.795951
35,000,000
27,858,269
1.0666
0.045994
0.5985
0.626027
33,000,000
20,658,903
2.0345
0.067419
1.9382
2.068870881
34,000,000
70,341,610
148,240,983
1.1055
-0.0391134
0.7671
0.737096
38,000,000
28,009,651
0.8561
0.015299
0.8625
0.875695
35,000,000
30,649,334
0.9862
-0.07538
0.5985
0.553385
33,000,000
18,261,713
2.224
0.093143
1.9382
2.118730302
34,000,000
72,036,830
148,957,529
1.1807
0.06802352
0.7671
0.819281
38,000,000
31,132,672
0.837
-0.02231
0.8625
0.843257
35,000,000
29,514,002
0.9632
-0.02332
0.5985
0.584542
33,000,000
19,289,882
2.385
0.072392
1.9382
2.078510342
34,000,000
70,669,352
150,605,908
1.1279
-0.0447192
0.7671
0.732796
38,000,000
27,846,243
0.8432
0.007407
0.8625
0.868889
35,000,000
30,411,111
0.8244
-0.1441
0.5985
0.512254
33,000,000
16,904,394
1.908
-0.2
1.9382
1.55056
34,000,000
52,719,040
127,880,788
0.9806
-0.1305967
0.7671
0.666919
38,000,000
25,342,933
0.8137
-0.03499
0.8625
0.832325
35,000,000
29,131,367
0.7325
-0.11148
0.5985
0.531782
33,000,000
17,548,813
1.6145
-0.15383
1.9382
1.640054455
34,000,000
55,761,851
127,784,964
0.902
-0.080155
0.7671
0.705613
38,000,000
26,813,298
0.8038
-0.01217
0.8625
0.852006
35,000,000
29,820,219
0.6546
-0.10635
0.5985
0.534851
33,000,000
17,650,071
1.4506
-0.10152
1.9382
1.741438786
34,000,000
59,208,919
133,492,507
0.8278
-0.0822616
0.7671
0.703997
38,000,000
26,751,890
0.757
-0.05822
0.8625
0.812282
35,000,000
28,429,880
0.4776
-0.27039
0.5985
0.436669
33,000,000
14,410,081
1.1565
-0.20274
1.9382
1.545242176
34,000,000
52,538,234
122,130,084
10
0.6809
-0.1774583
0.7671
0.630972
38,000,000
23,976,925
0.7153
-0.05509
0.8625
0.814988
35,000,000
28,524,595
0.4985
0.04376
0.5985
0.624691
33,000,000
20,614,791
1.4445
0.249027
1.9382
2.420864591
34,000,000
82,309,396
155,425,708
11
0.6648
-0.0236452
0.7671
0.748962
38,000,000
28,460,548
0.7241
0.012303
0.8625
0.873111
35,000,000
30,558,883
0.5235
0.05015
0.5985
0.628515
33,000,000
20,740,996
1.4745
0.020768
1.9382
1.978453375
34,000,000
67,267,415
147,027,842
12
0.7225
0.08679302
0.7671
0.833679
38,000,000
31,679,799
0.813
0.122773
0.8625
0.968392
35,000,000
33,893,713
0.6575
0.255969
0.5985
0.751698
33,000,000
24,806,024
1.8715
0.269244
1.9382
2.460048355
34,000,000
83,641,644
174,021,181
13
0.8555
0.18408304
0.7671
0.90831
38,000,000
34,515,784
0.8382
0.030996
0.8625
0.889234
35,000,000
31,123,201
0.6283
-0.04441
0.5985
0.57192
33,000,000
18,873,368
1.8095
-0.03313
1.9382
1.873990329
34,000,000
63,715,671
148,228,024
14
0.7831
-0.0846289
0.7671
0.702181
38,000,000
26,682,885
0.8518
0.016225
0.8625
0.876494
35,000,000
30,677,300
0.5876
-0.06478
0.5985
0.55973
33,000,000
18,471,103
1.5772
-0.12838
1.9382
1.689377751
34,000,000
57,438,844
133,270,131
15
0.7671
-0.0204316
0.7671
0.751427
38,000,000
28,554,222
0.8625
0.012562
0.8625
0.873334
35,000,000
30,566,704
0.5985
0.01855
0.5985
0.609602
33,000,000
20,116,872
1.9382
0.228887
1.9382
2.381828075
34,000,000
80,982,155
160,219,954
CANADA
NEW ZEALAND
BRITISH POUND
TOTAL ALL
COUNTRIES
2,794,712.88
1,539,133.49
2,377,260.15
10,807,872.11
14,512,605.99
28,331,078.25
29,959,747.56
19,168,262.56
66,523,506.91
143,982,595.28
68% Confidence
Interval
742,778.93
409,070.97
631,828.32
2,872,516.78
3,857,161.13
27,588,299.32
29,073,857.17
29,550,676.59
30,368,818.54
18,536,434.24
19,800,090.88
63,650,990.14
69,396,023.69
140,125,434.15
147,839,756.41
95%
Confidence Interval
1,414,293.87
778,894.70
1,203,037.52
5,469,437.43
7,344,257.00
26,916,784.38
29,745,372.11
29,180,852.86
30,738,642.26
17,965,225.04
20,371,300.08
61,054,069.48
71,992,944.35
136,638,338.28
151,326,852.29
standard
deviation
min
ANSWER TO QUESTION B:
A$
C$
NZ$
A$
1.00
C$
.35
1.00
NZ$
.41
.39
1.00
Pound
.30
.17
.82
Pound
1.00
From the table above (the correlation coefficient matrix), shows some positive
correlation among all the countries.
From the table above, it shows that the aggregate dollar cash inflows of Whaler is
more uncertain than if exchange rate movements were completely independent.
If one currency declines in value, the other currencies would probably decline as
well.
ANSWER TO QUESTION C:
The executive approach is perhaps slightly easier to use
however it may be less reliable.
ANSWER TO QUESTION D:
Referring to the table 2 (slide 4), is the calculation for items below:
AUSTRALIA
CANADA
NEW ZEALAND
BRITISH POUND
TOTAL ALL
COUNTRIES
standard
deviation
2,794,712.88
1,539,133.49
2,377,260.15
10,807,872.11
14,512,605.99
min
28,331,078.25
29,959,747.56
19,168,262.56
66,523,506.91
143,982,595.28
68% Confidence
Interval
742,778.93
409,070.97
631,828.32
2,872,516.78
3,857,161.13
27,588,299.32
29,550,676.59
18,536,434.24
63,650,990.14
140,125,434.15
29,073,857.17
30,368,818.54
19,800,090.88
69,396,023.69
147,839,756.41
95%
Confidence Interval
1,414,293.87
778,894.70
1,203,037.52
5,469,437.43
7,344,257.00
26,916,784.38
29,180,852.86
17,965,225.04
61,054,069.48
136,638,338.28
29,745,372.11
30,738,642.26
20,371,300.08
71,992,944.35
151,326,852.29