Stakeholder Capitalism Model and the Shareholder Wealth Maximization Model - Finance Assignment Help

Assignment Task:

Question 1:

Discuss the twin agency problem. What are the measures that can reduce the problem?

Question 2:

Differentiate between the stakeholder capitalism model and the shareholder wealth maximization model.

Question 3:

Classify the following as a transaction reported in a sub-component of the current account, or the capital and financial accounts of the countries involved:

• An Australian company purchases insurance from a U.K. based insurance company.

• An Australian resident purchases a laptop made in Japan from an Australian retailer.

• A German investor buys some Australian treasury bonds.

• A German company hires an Australian consultancy firm to solve some issues.

• A U.S. firm acquires 100% shares of an Australian Telecom company.

Question 4:

Discuss the ‘impossible trinity’. Provide and discuss relevant examples.

Question 5:

At a particular time, exchange rates between the Australian Dollar, Euro, and U.S. Dollar quoted by three banks are as below:

Bank A: $0.5880/A$

Bank B: €0.7143/A$

Bank C: $1.09/€

If an Australian trader has A$1.5m available to invest, determine the percentage return for the trader if making a profit through a triangular arbitrage strategy is possible.

Question 6:

Discuss the international fisher effect. What is the relevance of this theory in the global financial context? Explain.

Question 7:

A German car now costs €50,000. The spot exchange rate is €0.7143/A$. The expected inflation rates in Australia and Germany are, respectively, 0% and 2.0%. A$ is the home currency.

1. Determine the Australian dollar price of that car now.

2. Determine the Australian dollar price of that car one year from now if there is an 80% exchange rate pass-through.

Question 8:

John is a U.S. based Forex trader. He focuses principally on the Japanese Yen/U.S. Dollar (¥/$) rate. The current spot rate is ¥110/$. After considerable study, he concludes that the exchange rate, in the coming 60 days, will probably be about ¥95/$. He has the following options on the Japanese Yen to choose from:

Discuss whether he should buy a Put on ¥ or Call on ¥ and determine his net profit if the spot rate at the end of the 60 days is ¥100/$.

Question 9:

On a particular date, the exchange rate between the Great Britain Pound (GBP) and the Australian Dollar and the exchange rate between the Australian Dollar and Euro were respectively £0.6223/A$ and A$1.55/€. On a later date, the exchange rates were respectively £0.6101/A$ and A$1.50/€. What were the percentage changes in values of the GBP and Euro against the Australian Dollar between these two dates? Were the changes devaluation or revaluation or appreciation or depreciation of these currencies? Assume that Australian Dollar is the home currency.

Question 10:

An Australian organization has a ¥40,000,000 account receivable from a Japanese customer in 2 months. The current Japanese yen (¥)/Australian Dollar (A$) spot exchange rate is ¥87.35/A$. The Australian organization expects the spot rate in 2 months to be ¥91.45/A$. The 2-month forward exchange rate is ¥89.50/A$. The Australian Dollar (A$) 2-month borrowing rate is 6.00% per annum, and the Australian Dollar (A$) 2-month investment rate is 4.00% per annum. The Japanese yen (¥) 2-month borrowing rate is 8.00% per annum, and the Japanese yen (¥) 2-month investment rate is 3.20% per annum. The organization’s weighted average cost of capital is 10% per annum. The organization is considering three positions: remaining unhedged, using forward market hedge, and using money market hedge. Which of these positions should the organization adopt?

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