Currency crisis

WILMINGTON UNIVERSITY

COURSE TITLE: Advanced Financial Analysis

COURSE NUMBER: MBA 7294

FACULTY MEMBER: John Bish

Week #5 Case Study – Currency Crisis in the United Kingdom and Hong Kong

Case Study Analysis Paper grading rubric

Grading Criteria Maximum Points

Define currency risk. 5 Discuss factors that cause and contribute to changes in currency exchange rates and a firm’s

exposure to exchange rate fluctuations.

Issue #1:

Issue #2:

5 5

Discuss how currency rate fluctuations and currency risks apply to a firm’s:

Discuss the effect on Balance Sheet

Discuss the effect on Income Statement

Discuss the effect on Cash Flow Statement

5 5 5

Discuss the economic performance of Germany and the United Kingdom from 1988 to 1992.

Discuss the effect of differences in economic performance affect exchange rates

Discuss effect on How does the Exchange Rate Mechanism (ERM) work

Discuss the shock from the perspective of the periphery countries

7.5 7.5 5

Discuss the attack on the Hong Kong dollar.

Discuss the mechanics of a speculative attack and the “double play” process.

Assume the Hong Kong Monetary Authority (HKMA) follows the self-regulating

mechanism:

What actions would the speculators take?

How would the HKMA respond?

10

5 5

Provide a detailed evaluation of the actions taken by the Hong Kong government compared

with alternatives it might have taken.

How does Mundell’s Trinity factor into your analysis?

Was this a first-, second-, or third-generation crisis?

10 10

Proper spelling, punctuation, report components, and APA Formatting 10 Total 100