Take-Home Examination Questions (30 marks)

Please answer all 6 questions. Each question is worth 5 marks. You need to justify your answer with an appropriate example in each question. The minimum word limit is provided in each questions. There is no maximum word limit.

1. You work as an investment adviser for a large financial services company, providing investment recommendations to retirees in You have a mutual referral arrangement with a stockbroker: She refers clients to you that require services for indirect or non-listed assets and structures (e.g. managed funds), and you send to her clients that require services for direct, listed assets (e.g. shares). She has referred to you over a dozen clients in the past year, whilst you have only referred 1 client. As such, she is concerned that the referral arrangement is not working for her. To keep her happy, you promise to refer 1 client per month going forward.

In discussion with clients, you begin to push clients to consider investing directly in shares through a stockbroker, rather than using indirect vehicles. Whilst direct shareholdings are not appropriate for the clients that you speak to, you still manage to convince 1 client each month to use the stock broker’s services.

1. Identify the ethical dilemma you face in this situation, along with the main stakeholders that could be negatively (minimum 200 words)
2. Discuss what your employer might do to eliminate such behaviour in the

(minimum 200 words)

2. Social Return on Investment (SROI) is one tool for measuring the social impact generated by an organisation or It does so by benchmarking social outputs, such as meals provided or vaccines delivered, and assigning them financial values ($).
3. Consider the main approaches to ESG (minimum 200 words)
4. Identify which approach is most likely to use SROI as part of their portfolio construction (minimum 200 words)

3. Answer the following two questions:
   1. Who are the participants in the forward exchange market? What advantages does this market afford these participants? (minimum 200 words)
   2. Does Foreign Currency Hedging Pay Off? Please justify your answer with an appropriate example. (minimum 200 words)

4. Helania is a small country in Eastern Europe with a hard peg currency system that uses the The country is undergoing a string of financial deregulations and is considering adopting a new FX system. As such, the Helanian government is considering creating its own currency, the Helanian ‘Hela’. To do so, the government is considering two system options: (1) a conventional-pegged arrangement to the euro; or (2) a free-floating Hela.

1. Discuss how these new systems would compare to their current arrangement (minimum 200 words)
2. Identify the main disadvantages to adopting either (minimum 200 words)

5. Safari Australia is an Australian tech company that produces wearable technology for professional and amateur athletes. All of its production is done in Australia, with the only major component sourced from overseas being semiconductors (in US dollars). Its annual revenues exceed $120 million and it currently has markets throughout Australia, North America and Europe. To increase the visibility of their products, and also as a tool to open up to the rest of the world, the company has decided to accept Bitcoin as a means of payment for their product. They expect that by the end of the year, 10% of all sales will be in Bitcoin, with the remaining sales mainly being made in Australian dollars (20%), US dollars (45%), euro (15%) and UK pound (5%).

Against this backdrop, the finance manager of Safary Australia believes that the US dollar will depreciate significantly over the next few months and that price of Bitcoin will swing up and down wildly.

1. Discuss at least two (2) factors that might cause the downward pressure on the US dollar along with the effect of the depreciating currency on Safary’s final earnings. (minimum 250 words)
2. Identify how the US dollar depreciation and the Bitcoin price volatility might be managed by Safari. (minimum 200 words)

6. In deciding whether to invest abroad, management must first determine whether the firm has a sustainable competitive advantage that enables it to compete effectively in the home What are the necessary characteristics of this competitive advantage? Explain in detail. (minimum 400 words)