Assignment Sheet
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Unit Name
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International Financial Management
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Unit Code
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BFW2341
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Assignment Name
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Forex Simulation Trading
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Assignment Number/Reference
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Assessment 1
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Weightage
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30%
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Learning Outcomes
This assignment assesses the following learning outcomes:
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Learning Outcome Number
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Learning Outcome Description
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LO1
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Explore the international financial environment and the importance of foreign exchange risk management.
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LO3
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Demonstrate how foreign exchange market mechanisms can be used to hedge foreign currency transaction exposure.
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Weighting
This assignment is worth 30% of your overall grade for this unit.
Requirements
This assignment has the following requirements:
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Assignment Type
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Individual
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Response Format
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Written copy
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Response Specifications
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N/A
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Due Date
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4.30 pm (Malaysian Time), 4 April 2025
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Submission Process
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Submit with Moodle
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Notes:
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N/A
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Assignment Instructions
There are three parts, in part 1 you are required to demonstrate currency trading using the platform. MetaTrader 5 demo account. Complete both the table of historical price of the currency pair and the transactions records and describe the transactions and comment the trading performed during the last three weeks. Students may use Instant Execution and Pending Order (Buy Limit and Sell Limit) for the trading.
Part 2 Conduct a regression analysis to estimate the relationship between the exchange rate for the period from 2000 – 2023 (use annual data) based on the given variables.
Part 3 is a short essay question that required you to describe the factors that drives the movement of your choice pair of currency in part 1 above?
BFW2341 S1 2025 Forex Trading Simulation
Student name:
Student ID:
MetaTrader 5 demo account information
User ID (digit): XXXXXXXXXX
Password: XXXXXXXX
Part 1: Trading currencies (40 marks)
a) Fill in the historical price of the currency pair used to trade (10 marks)
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Date
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Currency pair
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Weekly High
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Weekly Low
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b) Fill in your transaction records (entry prices), increase rows if necessary. (10 marks)
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Date
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Currency pair
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Order type (market/limit)
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Volume (lot)
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Executed price
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c) Describe your trading transactions, including your strategy, key decisions, and market conditions that influenced your trades. Assess the effectiveness of your approach, highlighting successes, challenges, and risk management. Reflect on your overall performance and suggest improvements for future trading. (20 marks)
Word Limit: 1000 words
Part 2: Regression Analysis (40 marks)
a) Conduct a regression analysis to estimate the relationship between the Exchange Rate (Dependent Variable) for the period 2000–2023 using annual data for one of the following currency pairs; (20 marks)
i) Canada (Canadian Dollars to USD Spot Exchange Rate Annual)
or
ii) Japan (Japanese Yen to USD Spot Exchange Rate Annual)
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iii) Singapore (Singapore Dollars to USD Spot Exchange Rate Annual)
The independent variables to be analysed are as follows;
· Constant Gross Domestic Product per capita
· Inflation, Consumer Prices (Percent)
· Central Government Debt (Percent of GDP)
The above database can be found at https://fred.stlouisfed.org/.
b) Interpret the regression results by explaining the relationship between the dependent variable (exchange rate) and the independent variables, identifying which factors have a statistically significant impact. (20 marks)
Your discussion may include these points;
- Discuss whether your findings align with economic theories on currency valuation, evaluating how inflation, GDP per capita, and government debt influence exchange rates in the selected country.
- Justify your relationship using actual events that have taken place in the financial environment.
- Discuss some limitations of your regression model.
Word Limit: 1000 words
Part 3: Short Essay Question (20 marks)
In this section, you are required to analyse and discuss the key factors that drive the movement of your chosen currency pair from Part 1. Your response should go beyond basic explanations and critically examine the macroeconomic, political, and market sentiment factors that influence exchange rate fluctuations. You can use actual and real-life examples to justify and support your answer.
Word Limit: 1000 words
(20 marks)