This assignment is designed to assess learning outcomes:
1. Analyse how the international dimension of finance affects the environment within which
business operate and how it affects the decisions of the firm.
2. Compare the financial products available on international markets
3. Devise and apply appropriate strategies using derivatives to manage currency risk.
4. Critically evaluate the use of derivative instruments to manage currency risk.
This assignment is Individual assignment.
This assignment requires you to:
Select TWO companies listed on the London Stock Exchange (FTSE 100, FTSE 250 or FTSE 350). TWO companies are from different industry sectors at your choice.
You MUST write a report and use the most recent and relevant three years’ information about the
companies you selected. These information can be found in company’s annual reports, company’s website and other reliable sources. In developing your report you MUST cover all the following
A. Identify three types of foreign exchange exposure (i.e. currency risk) each company faces.
Critically discuss and provide appropriate examples in support of your discussion. (20 marks)
B. Critically evaluate all the hedging techniques that companies can use to reduce the
currency risk and discuss how to select appropriate hedging techniques for a company. (25 marks)
C. Describe the hedging tools used by your selected TWO companies to manage the exposures
you identified in requirement (a). Then, critically discuss similarities and differences in terms of hedging strategy. (30 marks)
D. Review the empirical literature and/or theoretical literature published in the past 20 years
to discuss whether or not hedging will add firm’s value (your research for the review of the
literature should inform requirements a, b and c) (15 marks)
E. Use appropriate academic language, report style and APA referencing and citation style. (10 marks)
(TOTAL: 100 MARKS)
Word Count, Assignment Rules and Criteria for Assessment
a) The word count is 2,250
b) There will be a penalty of a deduction of 10% of the mark (after internal moderation) for work
exceeding the word limit by 10% or more. You can go 10% up or down.
c) The word limit includes quotations and citations, but excludes cover page, table of contents,
appendix and reference list.
d) The standard format for writing the report MUST be followed (Font: Times New Roman; Font
Size: 12; Line spacing: 1.5 lines; Alignment: text justify).
e) The assignment MUST follow the order of the main requirements listed in the “Assignment
Requirements” section (requirements A, B, C, D). Therefore, your assignment should be
structured as follows:
1. Cover page (Including: Original Title of the assignment, Name of the University,
Name(s) of Author(s), Date, Location)