Predictability of Foreign Exchange Rates Dissertation

Predictability of Foreign Exchange Rates - Dissertation Example I am also much obliged to my supervisors who guided me with their timely advice, feedbacks and suggestions which aided me in attaining the expected standard of work and keeping me punctual as per the scheduled deliveries of dissertation chapters. Table of Contents Serial no. Topic Page no. I Introduction, Aims & objectives and Research Questions 6 I.1 Introduction 6 I.2 Aims 6 I.3 Objectives 6 I.4 Research Questions 7 II Literature Review 8 III Research Methodology 15 IV Findings Analysis and Discussion 19 V Conclusion and Recommendations for future Research 33 VI References 40 List of Tables Table no. Topic Page no. 1a Regression Results of Equation (1a) 22 1b Regression Results of Equation (1b) 23 2a Regression Results of Equation (2a) 25 2b Regression Results of Equation (2b) 26 3a Regression Results of Equation (3a) 28 3b Regression Results of Equation (3b) 29 List of Tables in Appendix Serial no. Topic Page no. ... on: The collapse of the Bretton Woods System of fixed exchange rate in 1978 ushered in the new era of flexible exchange rate that aimed for the betterment of trade relations between countries. Free and floating exchange rate were assumed to be the solution to the barriers to free trade and hence, the newly acquired ideals of globalization. What remained uncalculated was the instability and lack of predictability associated with flexible exchange rates. In the aftermath of the Global Crisis of 2007, the predictability of exchange rates has evolved as one of the most relevant issues and pleads minute scrutiny and analysis. I.2 Aims: The objective of this research is to examine the depreciations, appreciations and devaluations in the value of the US Dollar relative to other major currencies and based on this analysis; draw a general conclusion on the degree of predictability of exchange rates in recent times. Furthermore, it attempts to identify the main factors responsible for the vola tility of exchange rates following the collapse of the Bretton Woods System and thus, offer a clear insight into the various mechanisms existent in the context of exchange rate predictability. I.3 Objectives: The main objectives of the research are: To compare the differences in the stability and predictability of exchange rates before and after the collapse of the Bretton Woods System of fixed Exchange rates. To study the variations in the value of exchange rate of US, with respect to other major currencies and based on this, gauge the relative increase or decrease in the stability and predictability of exchange rates. To identify the reasons for the changing degree of predictability in exchange rates. To study the implications of the varying degrees of predictability of exchange rates, in

Qantas Financial Analysis Case Study Example | Topics and Well Written Essays - 1000 words

Qantas Financial Analysis - Case Study Example An analysis of Qantas' financial position and business risk has been done with different profitability, liquidity and gearing ratios. Belkaoui (1998, p11) illuminates that "the profitability ratios portray ability of the firm to efficiently use the capital committed by stockholders and lenders to generate revenues in excess of expenses". The following profitability ratios provide an insight into the profit generating capacity and performance of the company over the last two financial years: The rate of return on total assets ratio expounds the ability of a firm in utilizing its various assets towards profit generation. Qantas' rate of return on total assets ratio has declined by about 25% in the year 2006 as compared to 2005. It suggests that the company's profitability has tumbled down significantly over the last two financial years. The net profit ratio evaluates a company's profitability position after considering all the operating costs and interest expense etc (Mcmenamin Jim, 1999). The net profit margin of Qantas again indicates a serious decline in the company's ability to generate profit out of its sales revenue. This ratio has also decreased by about 25% in the year 2006. The worth noting point is that the company's sales revenue, as suggested by its financial statements for the year 2006, has increased by about 8% in 2006. ... The company's short term financial position and business risks can be analyzed with the help of the following liquidity ratios: Liquidity Ratios 2005 2006 Current Ratio 0.74 0.93 Quick Ratio (Acid Test) 0.67 0.87 Average Receivables Collection Period 25.69 25.24 The current ratio measures a company's ability to liquidate its short-term liabilities out of its various current assets (Meigs & Meigs, 1993). The above table shows that Qantas' current ratio has increased by about 20% in the year 2006 as compared to 2005. It suggests and improvement in the company's ability to pay of its short term liabilities. The quick ratio examines the short-term solvency of a company after deducting its stock from the current assets (Mcmenamin Jim, 1999). The quick ratio for Qantas for the year 2006 further shows an increasing trend. This ratio has risen by about 23% in the year 2006 as compared to 2005. It illuminates that the company has acquired more capacity to pay off its short term debt after keeping aside its stock from the current assets. However, the company bears significant short term solvency risks, because it still possesses about $0.93 worth of current assets and $0.87 worth of quick current assets to pay of its $1 worth of current liabilities. T he average receivables collection ratio suggests that it takes the company about 25 days to collect cash from its debtors. This ratio shows a sign of stability in the company's collection policies. Qantas' long term financial position and business risk have been analyzed with the help of the following gearing ratios which illustrate the company's capital structure and its ability to meet its interest