Scribd
Upload
15 views3 pages

IFI Assignment 2025

The document outlines an assignment for Spring 2025 focused on analyzing exchange rate volatility and MNC risk exposure for XYZ Corporation. It includes detailed steps for collecting exchange rate data, performing cash flow analysis for subsidiaries in two countries, and evaluating the risk management techniques of a selected multinational corporation. Submission requirements include an Excel file, a report summarizing findings, and a group contribution table, with a deadline set for April 14, 2025.

Uploaded by

linh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
15 views3 pages

IFI Assignment 2025

The document outlines an assignment for Spring 2025 focused on analyzing exchange rate volatility and MNC risk exposure for XYZ Corporation. It includes detailed steps for collecting exchange rate data, performing cash flow analysis for subsidiaries in two countries, and evaluating the risk management techniques of a selected multinational corporation. Submission requirements include an Excel file, a report summarizing findings, and a group contribution table, with a deadline set for April 14, 2025.

Uploaded by

linh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

IFI assignment

*Spring 2025*

Part 1: Exchange Rate Volatility Analysis

Measuring the impact of exchange rate volatility on XYZ corporation’s earnings (XYZ
Corp is U.S. based):

1. Visit www.x-rates.com, navigate to the “Historic Lookup” section, and collect the direct
exchange rate between:
o Currency A and the U.S. dollar at the beginning of each of the last 10 years.
o Currency B and the U.S. dollar at the beginning of each of the last 10 years.
2. Cash Flow Analysis:
a. Country A:
o Assume XYZ subsidiary in Country A generated 10 billion (Currency A) in
earnings at the start of each year for the past 10 years.
o Convert these earnings to U.S. dollars using the corresponding exchange rate for
each year.
o Calculate:
▪ The year-to-year percentage change in the dollar cash flows.
▪ The standard deviation of these percentage changes to measure volatility.
b. Country B:
o Repeat the same process using 10 billion (Currency B) from your Country B
subsidiary.
o Analyze and compare the volatility in dollar cash flows with that of Country A.
o Then, combine the annual dollar cash flows from both subsidiaries and:
▪ Calculate the combined annual cash flows.
▪ Determine the year-to-year percentage changes and standard deviation for
this combined portfolio.
c. Comparison with Country A:
o Compare the volatility of the combined portfolio with that of the Country A cash
flows.
o Discuss whether the diversification across two countries led to more stable cash
flows.
d. Comparison with Country B:

1
o Compare the volatility of the combined portfolio with that of the Country B cash
flows.
o Discuss whether diversification led to improved stability compared to Country B
alone.

Part 2: MNC Risk Exposure Analysis

1. Select a Multinational Corporation (MNC) and visit its official website.


2. Access its Annual Reports for the last 3 years (typically found under “Investor
Relations”).
3. Identify and summarize the MNC’s:
o Transaction exposure
o Economic exposure
o Translation exposure
4. Describe and evaluate any risk management techniques the company uses to manage
currency exposure (e.g., hedging, derivatives, diversification).

Submission Requirements:
1. Excel File: Submit a spreadsheet containing all exchange rate data, cash flow
calculations, and volatility analysis.
2. Report (PDF): Include:
o A summary and interpretation of your findings.
o Clear tables and graphs supporting your answers.
o Analysis of the MNC’s risk exposures and mitigation strategies.
3. Group Contribution Table: Clearly outline the role and percentage contribution of each
group member.
4. References: Cite all sources used (APA7 format recommended).
5. Use clear formatting, visuals, and structured analysis.
6. Word Count: 2500 words (within ±10%).
7. Submission:
• A soft copy must be submitted via Microsoft Teams.
• A hard copy must be submitted to the FMT assignment box (in front of Room
201C).
8. DEADLINE: 11:59 p.m, 14th April, 2025

2
Group Currency A Currency B

1 EURO JAPANESE YEN

2 POUND KOREAN WON

3 EURO POUND

4 POUND SWISS FRANC

5 EURO KOREAN WON

6 EURO VIETNAM DONG

7 SWISS FRANC JAPANESE YEN

8 JAPANESE YEN VIETNAM DONG

9 JAPANESE YEN KOREAN WON

10 POUND VIETNAM DONG

You might also like