...dependent and independent variables, covering data for 10 years period which are from 2003 until 2012. The researcher used three independent variables that affect the prices of gold which are crude oil prices, inflation rates and exchange rates. The empirical results have found there is negatively significant relationship between inflation rates and exchange rates on gold prices, while a crude oil price is positively significant. The results of the study are valuable for both academic and investor. Index Terms—determinant, gold prices, crude oil prices, inflation rates, exchange rates price and sell it at high price later on. Thus, this is why the factors that affect the gold price must be determined so that people may estimate the timing to buy, hold or sell the gold. This study is made to seek the proofs for the possible factors that affect the gold price in Malaysia. From this research, the most important or most influence factor can also be determined. Simply put, the findings for this research will bring benefit to individual, group as well as the government in analyzing the movement of the gold price. To discuss more about this topic, this research paper present the sensitivity of gold prices to the changes in the crude oil prices, inflation rates and exchange rates factor by taking 10 years data from 2003 until 2012. II. DATA AND METHODOLOGY I. INTRODUCTION In world view, there are a lot...
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...Massachusetts Institute of Technology, Ph.D., February 1980 Doctoral Dissertation: Essays on Expectations and Exchange Rate Volatility. Yale University, B.A./M.A. summa cum laude, Honors in Economics, May 1975. PROFESSIONAL POSITIONS Professor of Economics, Harvard University, September 1999 – present; Thomas D. Cabot Professor of Public Policy, January 2004 – present. Chief Economist and Director of Research, International Monetary Fund, 2001–2003. Director, Harvard Center for International Development, 2003–2004. Professor of Economics and International Affairs, Princeton University, 1992–94; Charles and Marie Robertson Professor of International Affairs, 1995–1999. Professor of Economics, University of California at Berkeley, 1989–1991. Associate Professor of Economics, University of Wisconsin-Madison, 1985–1988. Economist, International Finance Division, Board of Governors of the Federal Reserve System, 1980–1983; Section Chief, Trade and Financial Studies Section, 1984. Economist, Research Department, International Monetary Fund, Oct. 1982 – Sept. 1983. VISITING POSITIONS BP-LSE Visiting Centennial Professor, London School of Economics, 1998–99 academic year. Morgenstern Visiting Professor of Economics, New York University, spring semester 1995. Visiting Scholar, Bank of Japan, Institute for Monetary and Economic Studies, summer 1991. Visiting Scholar, Research Department, World Bank, summer 1989. Visiting Scholar, Board of Governors of the Federal Reserve System,...
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...AID AND THE DUTCH-DISEASE IN ETHIOPIA Monetary Policy and Economic Research Directorate National Bank of Ethiopia Teferi Mequaninte tefmeq@yahoo.com May, 2005 SECTION ONE Introduction Following the introduction of the Structural adjustment program (SAP) in 1992 to the Ethiopian economy, there was a massive inflow of foreign aid in the form of grants, concessional loans and technical assistance. Net aid1 inflows to Ethiopia during the Derg period were around 7 percent of GDP and are doubled to 14 percent of GDP during the EPRDF regime. These elevated flows have raised a number of concerns, ranging from fears about the effect of aid inflows on the real exchange rate and export performance. The source of anxiety for all this is the Dutch disease problem of foreign aid. While seemingly beneficial foreign aid inflows may generate undesirable effects in the economy. These undesirable effects include a decline in export performance and manufacturing production caused by appreciation of the real exchange rate and resources moving out of manufacturing into other sectors (Timothy,1997). There are also concerns about aid sustainability. Specifically, while LDCs have been forced to take on greater burden of global adjustment, most donor countries have been unwilling to expand financial support for adjustment in the LDCs (Bigsten, 2003). These could be due to different motives by the donor countries. Instead of addressing the most developmental constraints...
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...The relationship between stock prices and exchange rates in China Mengyuan Chen Illinois Wesleyan University Dec 10, 2012 Abstract This paper uses the data of RMB exchange rates and stock market prices in China from 1994 to 2011 to estimate the relationship between stock prices and exchange rates. There are two major theories concerning the relationship. According to the portfolio balance effect, these two variables should be negatively related; in addition, according to the international trading effect theory, these two variables should be positively related. The linear regression model is adopted to observe the various relationships between stock and foreign exchange markets. The results confirmed my hypothesis, which indicates that the international trading effect is more dominant, thus the net effect is a positive causal relationship from exchange rates to stock prices. I. Introduction Within the emerging Chinese market, China now has more open policies and advanced financial market instruments to promote globalization. For example, China started to allow the RMB to float within a larger daily range in 2005 and brought derivative options into the stock market. These significant steps all suggest that China is beginning to face a new economic condition. For instance, the challenging policy making of RMB exchange rate is one. Exchange rates and stock prices are both key indicators of the economy and financial markets. So the relationship between those two becomes an...
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... 9:30-10:30 And by appointment Note that I am always willing to schedule additional office hours by appointment. I check email frequently, so that is also a good way to communicate. If I do not respond to your email message, that means I did not receive it. Please send it again. Email: butcher@ups.edu Required Course Materials Text: Madura, International Financial Management, Abridged 10th Edition, South-Western, 2011 Book: Lewis Michael, Boomerang: Travels in the New Third World, Norton, 2011 Calculator: A calculator is required. A financial calculator would be preferable, as it would have functions for bond valuation, net present valuation (NPV), internal rate of return (IRR), present value (PV), and future value (FV). A suitable calculator, the HP10-B, is available in the bookstore for about $30. Harvard Business School Cases https://cb.hbsp.harvard.edu/cbmp/access/17920074 The above is the URL for Harvard Business School so that you can obtain discounted student pricing for the cases: Group Ariel S.S.: Parity Conditions and Cross-Border Valuation (Note that there is no need to purchase the audio version of this case.) Pixonix Inc. Addressing Currency Exposure Recommended: 1. Subscription to the Wall Street Journal. Several class sessions will utilize information from the Wall Street Journal. See syllabus for the dates...
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...BUS 138 – Section 001 International Finance Instructor: Dr. Yun Liu Office: Anderson Hall 214 Phone: (951) 827-6447 Fax: (951) 827-3970 E-mail: yun.liu@ucr.edu Quarter: Winter 2013 Lecture time: TuTh 12:40 pm – 2:00 pm Classroom: Olmsted Hall 421 Course Website: http://ilearn.ucr.edu/ Office Hours: TuTh 11:15 am – 12:15 pm Course description The course introduces you to the financial management of multinational corporations operating in a global environment. You will be exposed to a number of topics in international finance including the international financial systems, balance of payments, foreign exchange markets, measuring and hedging exchange rate risk. Course/Learning objective Students should expect to develop an integrated analytical and decision making perspective that will enable them to extend financial concepts such as capital budgeting and risk management, and instruments such as forwards and options to their international analogs. Students should also be able to critically evaluate the use of international financial management models within a case analysis framework. Prerequisite BUS 106 with a grade of "C-" or better OR ECON134 with a grade of "C-" or better Course Materials Notes Lecture notes will be posted on iLearn throughout the term. Textbook International Financial Management, 11th ed, by Madura Business press Such as the Wall Street Journal, the Economist, and etc. 1 Grading Policy Grade elements will be posted on iLearn. If...
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...provides a very basic relationship between the interest rate on an asset which is dominant in one unit of a country’s currency in relation to the same asset in another country and the exchange rate that is expected to result in the two countries. The interest rate theory states that local interest and foreign interest rates have a crucial effect on the forward exchange rates between 2 or more countries. The theory is generalized based on two conditions: · The capital is free to move from one country to another i.e. its mobile · The assets used can be substituted for one another. I.e. they have perfect substitutability. Various economists including John Keynes have found that the empirical evidence that often covered the interest rate parity, in general, holds though not specific because of certain effects of several risks, costs, taxation and even ultimate differences in liquidity (Mishkins, Fredric S (2006), economics of money. Uncovered interest rate arises as a result of satisfying the no-arbitrage condition without necessarily using the future contract as a method of hedging against foreign exchange risks. The risk-neutral business people will be indifferent to the interest rates that are at their exposure and the main reason for this is the fact that the dollar return will be equivalent to the pound or euro return after self-adjustment thus eliminating the chances of uncovered interest arbitrage gains. Uncovered interest rate parity (UIP) is a classic model or topic of the international...
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...Assignment # 2 Introduction This research aims to highlight and focus on the Foreign Exchange Market as well as the Net International Reserves, their stabilizing methods and strategies, along with a discussion on the analysis and effects of the measures taken to attain success within the Jamaican economy. The foreign exchange market is defined as (main function) a market used for converting from one country’s currency to another using an exchange rate which determines the value of one country’s currency against another. The Jamaican foreign exchange market came to full liberalization in the 1990’s. Since then there has been much discussion on the efficiency of the market and the appropriateness of the foreign exchange rate. “The use of market microstructure models has become very popular in financial market research stemming from the inability of traditional macroeconomic models to adequately capture the short-term dynamics of financial markets” (Frankel and Froot, 1990).There have been concerns as to whether the foreign exchange rate correctly reflects the forces of supply and demand in the market. The role of the Bank of Jamaica when it pertains to foreign exchange market is market intervention, market surveillance and data collection and information dissemination; with particular attention paid to intervention. The secondary function of the foreign exchange market is to provide insurance against foreign exchange risk. Foreign exchange risk can be defined as any adverse...
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...in providing an analysis of business operations and operating policies to assure appropriate regulatory compliance, assisting lobbying efforts for industry specific assistance and or legislation that we deem appropriate for the consumer, industry and government. On top of all these services the Elias Group also provides grants and professional research. Just like any other business the goal is to increase profit and expand. The Elias Group is considering in expanding but as good business managers they have to consider several of factors including the benefits and disadvantages of going public through an IOP, acquiring another organization or merging. Taking a company public through the Initial Public Offering (IPO) requires several of steps followed by the advantages and disadvantages one must considered. Initial Public Offering requires a company to turn its company into a corporation. Create some good publicity for the company, have financial records ready, hire a corporate attorney and file a registration statement. When acquiring another company, the Elias Group has to take into consideration several of factors such as; doing research...
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...International Journal of Marketing, Financial Services & Management Research Vol.1 Issue 11, November 2012, ISSN 2277 3622 Online available at www.indianresearchjournals.com INDIAN CURRENCY FUTURES: AN ANALYTICAL STUDY OF ITS PERFORMANCE DR. DEVAJIT MAHANTA* * Vice President-Benzcom Consulting Pvt. Ltd. 3A-Oberon Appartement, 6-Lamb Road Ambari, Guwahati-781001, Assam, India ABSTRACT Since its inspection in 2008, currency derivative trade in India had experienced explosive growth, both in volumes and value over the years across all the four currencies contracts that were in operation in INRUSD, INRGBP, INREUR and INRJPY. However in terms of the open interest currency derivatives trade in MCX is more as compared to the NSE. By consider both stock and commodity exchanges for launching currency futures contracts government of India has done a commendable job which is expected to increase the number of quality players, introduce healthy competition and boost trading volumes of Indian currency futures. The global markets (mainly USA) become active only after Indian markets close at 5.00 pm and as a result there is an evident fear about the risks associated with overnight fluctuations in the currency pair. Therefore the functioning as well as the profitability in Indian currency futures is effected by the current performance of the international currency futures market. It is imperative that any evaluation, projection on Indian currency futures market should be undertaken keeping...
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...skilled labors and proper infrastructure, high unemployment rate, low standard of living, continuous disequilibria in the economy, defective administrative and inappropriate tax structure. However, this country has a good prospect of doing better because of having huge natural and other resources which fascinated many investors to invest in Bangladesh. In spite of going through all these hardships and troubles, this country is trying to overcome these lacking through the development of different macro aggregates. The macro aggregates that affect the development of the economy of Bangladesh are National Income, Inflation, Exchange Rate, Export, Import, Remittance, Money Supply and Government Expenditure. For this research paper, four macro aggregates have been selected and then comparison and demonstration have been done about how these four factors influence the economy of Bangladesh in the reference period (April 2013 to June 2013). The four macro aggregates are: 1. Exchange Rate 2. Export 3. Inflation 4. Remittance Among all other indicators, these four would be the most relevant and constructive ones in terms of explaining Bangladesh’s economy. 1.1 OBJECTIVE The term project has the following objectives: * To have extensive knowledge of Exchange Rate, Export, Inflation and Remittance growth trend in the reference period and how the trends vary. * Reasons behind Exchange Rate, Export, Inflation and Remittance growth trend fluctuation...
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...Executive Summary James Hardie is the largest manufacturer of fiber cement products and systems for internal and external building construction applications in the United States, Australia, New Zealand and the Philippines. Through significant research and development expenditure, James Hardie developed key product process technologies that provide James Hardie a competitive advantage. Financial crisis had a significant impact on the construction industry. USA is the largest market of James Hardie, its demand for new building construction and renovations near historic lows. However, operation in Asia-Pacific region reflects a strong customer market and significant expenditure on R&D provides it with competitive advantages. These are all the strengths James Hardie has when facing extreme shifts. Foreign exchange risk is considered as one major financial risk for the company. The volatility of AUS/USD exchange rate significantly affected corporation costs that incurred in AUD but reported in USD. It is suggested to a use forward rate agreement to hedge over 71% of Asbestos-related asset and liabilities that are not naturally hedged. Commodity Price risk is another significant financial risk for the group. Pulp demonstrated more price sensitive than other input and its price had been extremely volatile the past few years. Recent high commodity price resulted in significant increase in cost of sales and decrease in profit margin. A pulp call option is recommended to ensure...
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...Study the Role of Hedging to Reduce Exchange Risks on Investments in Global Stock Market Executive Summary In this global business environment, organizations are engaged to perform business activities across the countries. In order to execute international activities, they are tended to receive and make payment in different currencies. Currency value of country tends to change due to several economic aspects such as government decisions, stability, GDP and BOP rate etc. Changes in such factors are tended to increase vulnerability of currency value that is responsible for creating exchange risk. Exchange of currencies among the business organizations and corresponding changes in their values creates variation in their positions of cash flow, balance sheet and future profitability. An adverse effect of firm’s profitability leads significant decrement in the value and performance of respective stock. Due to this, exchange risk is needed to be addressed with use of risk management strategy. The research is designed to Study the role of hedging to reduce exchange risks on investments in global stock market. Research objective will contribute to determine hedging strategy role in reducing exchange risk from stock market investment. By using inductive approach, interpretive philosophy, mixed design and non-probability sampling method, objectives of this research will be achieved by the researcher. Both primary and secondary data sources will be used to obtain information. An...
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...BRAC University Journal, vol. V, no. 2, 2008, pp. 81-91 FOREIGN EXCHANGE RISK MANAGEMENT PRACTICES - A STUDY IN INDIAN SCENARIO Sathya Swaroop Debasish Department of Business Management Fakir Mohan University Vyasa Vihar, Balasore - 756019 Orissa, INDIA ABSTRACT Indian economy in the post-liberalisation era has witnessed increasing awareness of the need for introduction of various risk management products to enable hedging against market risk in a cost effective way. This industry-wide, cross-sectional study concentrates on recent foreign exchange risk management practices and derivatives product usage by large non-banking Indian-based firms. The study is exploratory in nature and aims at an understanding the risk appetite and FERM (Foreign Exchange Risk Management) practices of Indian corporate enterprises. This study focusses on the activity of end-users of financial derivatives and is confined to 501 non-banking corporate enterprises. A combination of simple random and judgement sampling was used for selecting the corporate enterprises and the major statistical tools used were Correlation and Factor analysis. The study finds wide usage of derivative products for risk management and the prime reason of hedging is reduction in volatility of cash flows. VAR (Value-at-Risk) technique was found to be the preferred method of risk evaluation by maximum number of Indian corporate. Further, in terms of the external techniques for risk hedging, the preference...
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...remain the designated standard-setter for US companies, but incorporate IFRS into US GAAP. c. The role of the FASB post-IFRS adoption has not been determined. d. The FASB will cease to exist. 3. Milestones in the transition plan for mandatory adoption of IFRS by US companies include all of the following except: a. Improvements in accounting standards. b. Limited early adoption of IFRS in an effort to enhance comparability for US investors c. Mandatory use of IFRS by US entities. d. All of the above are milestones in the transition plan for mandatory adoption of IFRS by US companies. 4. The roles of the IASC Foundation include a. establishing global standards for financial reporting. b. coordinating the filing requirements of stock exchange regulatory agencies. c. financing IASB operations. d. all of the above are roles of the IASC Foundation. 5. Which of the following statements is true regarding the IASC? a. The IASC is a public-sector, not-for-profit organization. b. The IASC is accountable to an international...
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