finance banking

PART 2 is assignment #5. It is a group effort, and you will be graded accordingly. Please complete the team contract and peer review form. Members that do not/or contribute less will be grade different. If your group has great synergy and contribution is equal, you can opt not to complete the peer review form.

The submission date is amended to Saturday, December 10 at 11:59 pm

PART 2 due end of week 12 - This section should be completed as a group and you will be graded as a group. 

5. As an MNC you encounter Foreign Exchange Risk -Hedging (20 marks)

(a) Discuss the different options for hedge receivables and payables (as discussed in class) and recommend to your Board the best hedging strategy for the MNC. Be sure to qualify your recommendations and use examples.

(b) As an MNC when you would use the spot rate, discuss and use examples

(c) If the MNC currency's (host) is weaker, how will it impact your investment (from question 2) and profits?

(d) Go to www.oanda.com Click on “Currency Tools”, then “Historical Currency Converters”, and  “Currency Trends”. Explain how the home currency has changed (compare with the host currency) over the last three months and how will it impact the MNC’s business.

(e) Your company will need to repatriate revenue back home, which hedging strategy will you use and why?

6. The Financial Market and the Central Bank -Does the host country has a strong financial market? (40 marks)

(a) What are the responsibilities of the central bank (for the host country) for regulatory control with a focus on the commercial and investment banking systems?

(b) What measures are in place to protect clients in the event a bank fails in the host country?

(c) To what extent does the Central Bank of the host country dictate the liquidity management policy pursued by individual banks to ensure the soundness of the banks (as an MNC you need to have a bank account in the host country, you need to investigate the soundness of the financial market).

(d) Discuss how does the Central Bank manages the money supply in the host country and compare it with the Central Bank of Canada?

(e) If the Central Bank ( for the host country) buys $100M bonds from the public and there is a decline in the required reserve ratio, what will happen to the money supply in the host country? Discuss  

(f) Describe how your MNC (a customer of a bank in the host country) can affect the money supply in the host country? Explain using examples.

(g) Your MNC will need to repatriate revenue to the home country, how will repatriation of revenue impact the home and host country, explain using examples

(h) Your MNC will need start-up finance, from question 2, from the first submission

· Explain how your method of finance will impact the home and host country. Use examples to amplify your response

(i) It is important that commercial banks have adequate capital

a. Explain why it is important

b. How does it benefit the public, shareholders, and clients

c. How it does not benefit the public, shareholders, and clients

 7. United States Presidential candidate Hillary Clinton ran on the policy, “no bank is too big to fail” (20 marks)

(a) Explain the too-big-to-fail policy and how the policy is associated with asymmetric information problems?

(b) CDIC is in place to protect clients in the event of a failing bank.

a. Discuss its two-payout method

b. Financial experts have criticized the CDIC; discuss two of the primary arguments against the CDIC

c. What are two primary arguments for CDIC

d. Over the years CDIC has changed the ways it calculates its premium; explain the evolution over the past years. (the evolution of how premiums are calculated).

Your project submission will be graded according to the criteria below.

	1-9.99	10-11.99	12-13.99	14-15.99	16-20	Score
17.0% Content Questions	One or more of the content questions are not addressed.	All the content questions are addressed. No supporting detail is provided, and the paper lacks self-reflection.	All the content questions are addressed. A cursory amount of supporting detail is provided. The self-reflection is trite and lacks insight.	All the content questions are addressed. Adequate supporting detail is provided, though the self-reflection remains vague and generalized.	All the content questions are addressed. Rich supporting detail and insightful self-reflection are provided.
1.0% Thesis Development and Purpose	Paper lacks any discernible overall purpose or organizing claim.	Thesis and/or main claim are insufficiently developed and/or vague; purpose is not clear.	Thesis and/or main claim are apparent and appropriate to purpose.	Thesis and/or main claim are clear and forecast the development of the paper. It is descriptive and reflective of the arguments and appropriate to the purpose.	Thesis and/or main claim are comprehensive. The essence of the paper is contained within the thesis. Thesis statement makes the purpose of the paper clear.
1.0% Argument Logic and Construction	Statement of purpose is not justified by the conclusion. The conclusion does not support the claim made. Argument is incoherent and uses non-credible sources.	Sufficient justification of claims is lacking. Argument lacks consistent unity. There are obvious flaws in the logic. Some sources have questionable credibility	Argument is orderly but may have a few inconsistencies. The argument presents minimal justification of claims. Argument logically, but not thoroughly, supports the purpose. Sources used are credible. Introduction and conclusion bracket the thesis.	Argument shows logical progressions. Techniques of argumentation are evident. There is a smooth progression of claims from introduction to conclusion. Most sources are authoritative.	Clear and convincing argument that presents a persuasive claim in a distinctive and compelling manner. All sources are authoritative
1.0% Mechanics of Writing (includes spelling, punctuation, grammar, language use)	Surface errors are pervasive enough that they impede communication of meaning. Inappropriate word choice and/or sentence construction are used.	Frequent and repetitive mechanical errors distract the reader. Inconsistencies in language choice (register), sentence structure, and/or word choice are present.	Some mechanical errors or typos are present but are not overly distracting to the reader. Correct sentence structure and audience-appropriate language are used.	Prose is largely free of mechanical errors, although a few may be present. A variety of sentence structures and effective figures of speech are used.	Writer is clearly in command of standard, written, academic English.
TOTAL: 20% Weighted