You are the CEO of Partido Switch Plc, which is a multinational corporation, incorporated in the US but invests in many emerging countries including Brazil. Brazil used to have a fixed exchange regime regarding its currency (Before the year 1999). However, Brazil moved to adopt a free float exchange rate regime as from January 1999.
a) Discuss the motives of Brazil’s move and its implications on the country’s economy after the change (60%). 600 words.
b) What strategy should you employ in order to manage the exchange rate exposure resulting from the change in the currency regime? (40%) 400 words. To answer this part of the Question you will need to read over Lecture 4 that I have uploaded this is very important as it has all the hedging strategy techniques that is needed for you to talk about in this question for the report as well as helping you pick 1 strategy that you need to go into detail with and calculate. Remember to mention other hedging strategies but pick and focus on only 1 that you can calculate as this needs to be done in detail. A good essay should include real market examples, figures and tables to support your arguments (especially when talking about Brazil’s situation and the hedging technique that you have chosen to go into detail).
Specific Guidelines for Report:
1- Your essay should not rely solely on the lecture notes and core textbooks.
2- You are expected to use external resources and professional databases to learn more about the topic and provide an adequate analysis. All external sources must be referenced accordingly.
3- You are expected to mention all possible techniques to manage the exposure of the company, but speak in details about one technique of your choice.
4- A good essay should include real market examples, figures and tables to support your arguments (especially when talking about Brazil’s situation and the chosen hedging technique).
5- You are entitled to use a numerical example of your own when it comes to the hedging technique.
6- Only use academic sources for statistic, graphs, data and research
7- No plagiarism!
General guidelines for Report:
I. Your essay should clearly demonstrate analytical, critical and evaluative skills in relation to international financial management.
II. It is expected that your essay should demonstrate a wide background of reading and research; and only then, you would get an above average grade.
III. All references should be acknowledged – (Harvard Referencing)
IV. Great standards of written English and presentation are expected and marks will be deducted if such standards are not met.
V. The length of the Report should be no more than 1,000 (exceeding the word limit by even 1 word will cost you 10% of the mark). Bibliography and tables do not count towards the word count!
– There needs to be lots of research done on Brazils economy to be able to answer the questions at a high level.
– Make sure you go over all the files and Lectures especially lecture 4 that I have uploaded, very important
– Make sure to read the case study question properly and answer all parts of the question carefully, every part of the questions has to be targeted.