FIN5DER Derivative Securities: Robert Half (RH) Company

Individual Assignment

The Individual Assignment is due on Sunday, 29 May 2022 by 11:55pm (AEST)

Robert Half (RH) is the prime recruitment company in Australia looking for highly talented, skilled and willing to learn postgraduate candidates for various permanent or contract jobs. According to their current webpage, Robert Half specializes, among others, “in providing businesses with skilled accounting and finance professionals on a permanent and contract basis.” In 2022, there will be several Risk Management roles in Australian companies. The detailed list of responsibilities for the Risk Manager positions is summarized in the RH’s Risk Management job description guide.

Assignment Part 1

RH’s pre-employment assessment for this position is to gauge the knowledge of accounting and finance professional candidates with respect to:

• derivatives instruments and models for managing financial risk
• the role of derivatives in transferring risks in the economy
• ways of designing contingent claims for assessing and managing company risk
• sound understanding of the trade-off between utilizing or not utilizing derivative instruments in financial risk management.

To apply for these positions, you need to demonstrate your knowledge relevant to the job description in a short essay (about 1000 words) by providing:

1. a concise overview of derivatives markets and tools.
2. three different assuming examples and figures of powerful and effective deployment of derivatives instruments and contingent claims. Like Swap, forward contracts, and Options.
3. three different real life examples of the dangerous and ineffective deployment of derivatives instruments and contingent claims.

Hint 1: For Part 1. a) consider the covered material in this subject. For Part 1.

1. b) you have a choice to select a fictitious company – for instance, company ‘XXX’. Finally, for Part 1.
2. c) consider some of the business snapshots discussed in this subject and Chapter 36 of the prescribed textbook Hull (2017). Moreover, you can also set your examples up to say 5 or 6 in a table, cover fully three in the body of the assignment and finish with some recommendations of how to avoid taking an excessive risk by professional market practitioners as well as how to avoid human errors in the market place.

Assignment Part 2

You have successfully passed the interview and have started your career as a derivative risk analyst. Your supervisor has asked you the following question: “Does hedging increase a firm’s value? “

Use the knowledge learnt from this subject and search at least five academic articles on this topic, summarize the findings from the literature with your own words, and write an essay (about 1000 words) to answer this question. 

  I have attached the following reference below for your research. However, your research is not   limited to these papers. You may download these papers the Internet.