Risk Management

In: Business and Management

Submitted By waynetee90
Words 976
Pages 4
Trading Strategy
Our team was assigned to be in the position of a corporation. Our primary objective was to raise fund. We needed to raise 19.7billion of Japanese Yens and 425million of British Pounds with 790million of Euros. Our secondary objective was to speculate and make a profit for the corporation.
As being a price taker, we needed to take whatever quotes given by banks or, if we called up corporations, and corporations. So we had to no control over the spreads of any currency. As far as our primary objective was concerned, we tried to take advantage of the volatility of the market to obtain, we hoped, the most favourable deals in order to use the minimum amount of Euros to obtain the maximum amount of Japanese Yens and British Pounds.
Our market view was closely linked with our speculative strategy. We anticipated that British Pound would be depreciating against the US Dollar as well as other currencies concerned in the dealing section in the short term because investors were expecting considerable rates cut would likely to be implemented by the Bank of England and the European crisis seemed to be being dealt with and investors were trying to take advantage of positive news about the crisis. Due to the aforementioned points, we chose to use Euro or US Dollar to speculate. Since we were given Euro as our starting currency, we did not need to implement any transaction, we could just keep Euro and observe the movement of this currency so as to make adjustments. We also planned to convert Euro into US Dollar if we thought the profitability of the US/GBP currency was better.
Performance Analysis
In the beginning of the section, we did not trade immediately as the market views of our team members did not coincide and we also had doubt as to which currency we need to raise first. Eventually, we decided to raise Japanese Yens first and then Euro. During the fund…...

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