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1)DQ (C) - Discussion Question 1 – (CDQ directed at upcoming CLA 1) Graduate Level

Prior to reading this DQ, please read the CLA1 assignment and understand what the assignment is asking you to complete. Once you have an understanding of the CLA1 assignment, please continue to the paragraph below to complete DQ1.

Using the Library Information Resource Network (LIRN), JSTOR, or any other electronic journal database, research eight (8) peer-reviewed articles that can be used to answer your upcoming CLA1 assignment. Your discussion should summarize the articles in such a way that it can justify any arguments you may present in your CLA1 assignment and should be different from the abstract. In addition to your researched peer-reviewed article, you must include an example of the article researched as it is applied by industry (company, business entity, and so forth).

Please note: This article summary should not be the only article researched for your CLA1 assignment. You may (and should) have several other articles researched to fully answer your CLA1 assignment. The concept of this DQ is to allow students to be proactive in the research necessary to complete this assignment. You may use your article summary, partially or in its entirety in your CLA1 assignment.

Important: Please ensure that your reference for the article is in correct APA format, as your reference in your discussion post. Depending on which electronic database you use, you should see a “Cite” selection for your article. In addition, there should be a variety of articles summarized and as such, students should have different articles summarized. Your summary MUST include ALL of the following in your DQ post (include every item in the bullet list below, or you will not receive full credit):

Do these in order:

1. In correct APA format, write the Reference of the article.

1. Clearly state what the article is about and its purpose.

1. Describe how you will use it in your upcoming assignment.

1. Repeat for a total of eight (8) peer-reviewed sources.

2) Comprehensive Learning Assessment 1 – CLO 3, CLO 4, CLO 6

CLA1 (Chapter 14)

Assume that you are the CFO of a large company that has a lot of cash, the CEO of the company wants to invest some the cash temporarily either in 90 days US treasury in dollars or 90 days French government security in Euro:

You are asked for advice and you are given the following information:

1. Let iNY = 90-day interest rate in New York.

1. Let iParis = 90-day interest rate in Paris.

1. Let E (e) = the expected spot rate in 90 days.

Read Chapter 14 of the textbook along with seven other peer reviewed publications and write a 5-7 APA standard formatted paper. Your paper must encompass the followings:

1. The variables to include in your report to the CEO of your company must demonstrate the most profitable investment for the company at the lowest risk.

1. The five steps of calculations in your textbook (Chapter 14) to be explained, put in notation, and be converted into a mathematical formula.

1. Your advice to the CEO must be based on:

1. The interest rate differential between the two countries remains constant.

1. The current status of interest rates in the two countries will change.

1. Provide the equation that exhibits the state of equilibrium between the money market and the foreign exchange market in these two countries.

1. Explain why this equation represents the Interest Rate Parity theorem?

1. How you can persuade your CEO that the Interest Rate Parity theorem is a reliable tool in forecasting the Dollar/Euro parity at the maturity date.

1. Please provide some reasoning on how multinational corporations can use this theorem to mitigate the currency risk in their foreign business activities.

1. Provide data for Expected Dollar/Euro rates and interest rates on 90 days securities from any financial website and Federal Reserve website and demonstrate your reasoning numerically.

Please refer to the Grading Criteria for Comprehensive Learning Assessment 1 in the University Policies for specific guidelines and expectations.