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FINA6321 Exchange Rates Project

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Question;Exchange;Rates Project;FINA;6321 ? International Finance ? Long Summer 2014;The;objective of this project is to examine the movement of exchange rates from;June 30, 2012 to June 30, 2014. Your task is to compare two foreign currencies;to the U.S. Dollar. The first foreign currency must be the Euro. The second;foreign currency may be any currency that floats or has managed float against;the U.S. Dollar.;Part;1: Data Collection;You;can collect exchange rates from Oanda?s website (www.oanda.com;1. Click;on Currency Converter at the top of the page and then click on the tab titled;Historical Exchange Rates. Choose US Dollar as the ?Currency I Have.? Under;?Currencies I Want? choose in two separate boxes the Euro and the second;foreign currency you are using in the project. Set the;?Range?;equal to 6/30/2012 to 6/30/2014. Choose Bid as the ?Price,? Rate as the;?Values,? and Weekly as the ?Frequency.? Click on the link ?download? on the;right-hand-side near the top of the page. Choose to save the file when prompted;and name it ?Data1.? (The data will save as an Excel comma-delimited file.);2. Go;back to the same page on www.oanda.com.;Choose the Euro as the ?Currency I Have.? Under ?Currencies I Want? choose in;the first box your second foreign currency. Set the ?Range? equal to 6/30/2012;to 6/30/2014. Choose Bid as the ?Price,? Rate as the ?Values,? and Weekly as;the ?Frequency.? Click on the link ?download? on the right-hand- side near the;top of the page. Choose to save the file when prompted and name it ?Data2.?;3. Open;Data1 from step 1. Column A should have the dates, Column B, the USD to Euro;and Column C the USD to second foreign currency. Open Data2 from step 2. Copy;Column B from Data2 (this should be the exchange rate between the Euro and your;second foreign currency) to Column D in file Data1. Choose Save As to save the;current ?Data1? as an Excel file (.xlsx) with the name ?yourname1.? (For;example, if your name is Don Brown, name the file DonBrown1.);4. Open;the Excel file ?yourname1? you created in step 3. Insert a column between each;of the exchange rate columns such that the dates are in column A, the USD to;Euro rates are in column B, the USD to second foreign currency rates are in;column D, and the Euro to second foreign currency rates are in column F. Sort;the data such that the date column is in ascending order (earliest date first;? latest date last).;Part;2: Data Evaluation;I.;Provide a spreadsheet that includes all;of the following. Name the spreadsheet ?yourname1.?;A. Data;downloaded from Oanda after conversion to date and exchange rate format. (These;are columns A, B, D, and F from above.);B.;Columns showing the;percentage change in each exchange rate each day. (Create in columns C, E, and;G.);C.;Column that calculates;the implied cross rate between the two foreign currencies using data for the;U.S. Dollar relative to the two foreign currencies. (Create in column H.);D. Show;the mean, standard deviation, minimum, and maximum values for each exchange;rate and percentage change column. (Use Excel statistical functions to;calculate values below each data column.);E. Graph;of the behavior of the actual exchange rates over the two-year time period. Put;all three exchange rates on the same graph. (Create graph on second sheet of;workbook.);F. Calculate;the difference in the actual exchange rate for the two foreign currencies and;the implied cross rate using U.S. Dollar exchange rates. (Create in column I.);II.;Research the currencies;you have chosen and write a summary which includes the following information.;The summary must be typed in Word using Times New Roman 12 point font, be;double-spaced, be no more than two pages long, and be free of grammatical;errors. Margins must be set at one inch all around. Similar to spreadsheet;above, name the Word (.docx) document ?yourname2.?;A.;Description of the exchange rates?;behavior over the period.;B. Identification;of the key events and/or factors that influenced the rates. You may find the;following links helpful as you work on your research;http://www.economist.com/topics/exchange-rates;http://finance.yahoo.com/news/category-currencies/;http://www.bloomberg.com/news/currencies/;http://online.wsj.com/public/page/news-currency-currencies-trading.html;http://www.ft.com/intl/markets/currencies;C.;Indication of the sources of work used;to prepare the summary.;III.;On a separate page at the end of the;Word file created in Part II, provide the following information.;A. Date;when the difference between the implied cross rate and the actual exchange rate;for the two foreign currencies was the largest. Please note that the difference;might be either a positive or a negative value.;B. Show;the profit earned through the process of triangular arbitrage if there were no;transaction costs and you were to begin with $10,000,000 using the exchange;rates from the date listed in part A of this section.;C.;Show all calculations for the necessary;steps.;Part 3: Due Date;and Grading;The;project is due no later than July 30, 2014 at 11:59 pm. Submit the project via;Class Email in Blackboard. Your submission should include two project files;(Excel spreadsheet and Word file).;You may need to;send two separate messages since only one attachment is allowed per message.;If;the project is late it will result in a 10 point deduction in the grade that;would have been assigned. If the project is more than two days late, the;project grade will be zero.;Project;grades will be based on the following criteria. The scores for all categories;will be summed to determine your overall project grade.;Poor;Fair;Good;Excellent;Score;Part;1: Data Collection;10;14;17;20;Part;2: Written Summary;10;14;17;20;Part;2: Triangular Arbitrage;10;14;17;20;Spreadsheet;and Graphs;10;14;17;20;Appearance;of the Report;10;14;17;20;TOTAL;POINTS;(Projects;may be rated as falling in the middle of scoring categories. For example, if;the ?Analysis? section of a paper is rated as falling between ?Good? and;?Excellent,? it would receive a score of 18.5 on that section (the average of;17 and 20).

 

Paper#49000 | Written in 18-Jul-2015

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