GROUP 2:

SALAU ABDUL MALIK OLARINOYE 810115

NURUL HUDA BINTI YAHYA 810572

RAZLINA BINTI ROMLI 806340

ALIANA SHAZMA AMIR BINTI AMIR 813298

NUR DIYANA BINTI ZAMRO 812395

SUBMISSION DATE : 22 MARCH 2013

CASE SOLUTION 4 : WHALER PUBLISHING

COMPANY

ANSWER TO QUESTION A:

By using the exchange rate data from the supplemental case problem of Part 3: Exchange Rate Risk Management, we calculated the:i.Percentage change in each exchange rate of year 1 till year 16 in order to determine the expected(forecasted) spot rate for year 1 till year 16.ii.Revenues from all countries (Australia, Canada, New Zealand and British Pound) by multiplying the number of foreign currency units to be received as in the data of the previous case above (as shown in the Table 1).

ANSWER TO QUESTION A (continued): Table 1

Year Scenario

Australia Canada NEW ZEALAND BRITISH POUND

Expected total revenue

Historical Exchange

%change Current spot future Expected amount Autralia Dollar revenue

Historical exchange

%change Current spot

future Expected amount EXPF Historical %change Current spot

future Expected amount EXPF Historical Exchange

rate

% change Current spot future Expected amount EXPF

0 1.2571 0.7671 38,000,000 0.9839 0.8625 35,000,000 1.0437 0.5985 33,000,000 2.0235 1.9382 34,000,000

1 1.0864 -0.1357887 0.7671 0.662936 38,000,000 25,191,586 0.9908 0.007013 0.8625 0.868549 35,000,000 30,399,202 0.95 -0.08978 0.5985 0.544769 33,000,000 17,977,364 1.7024 -0.15869 1.9382 1.630635869 34,000,000 55,441,620 129,009,772

2 1.1414 0.05062592 0.7671 0.805935 38,000,000 30,625,535 0.9137 -0.07782 0.8625 0.795384 35,000,000 27,838,432 1.0197 0.073368 0.5985 0.642411 33,000,000 21,199,563 1.906 0.119596 1.9382 2.170000705 34,000,000 73,780,024 153,443,555

3 1.1505 0.00797267 0.7671 0.773216 38,000,000 29,382,202 0.8432 -0.07716 0.8625 0.795951 35,000,000 27,858,269 1.0666 0.045994 0.5985 0.626027 33,000,000 20,658,903 2.0345 0.067419 1.9382 2.068870881 34,000,000 70,341,610 148,240,983

4 1.1055 -0.0391134 0.7671 0.737096 38,000,000 28,009,651 0.8561 0.015299 0.8625 0.875695 35,000,000 30,649,334 0.9862 -0.07538 0.5985 0.553385 33,000,000 18,261,713 2.224 0.093143 1.9382 2.118730302 34,000,000 72,036,830 148,957,529

5 1.1807 0.06802352 0.7671 0.819281 38,000,000 31,132,672 0.837 -0.02231 0.8625 0.843257 35,000,000 29,514,002 0.9632 -0.02332 0.5985 0.584542 33,000,000 19,289,882 2.385 0.072392 1.9382 2.078510342 34,000,000 70,669,352 150,605,908

6 1.1279 -0.0447192 0.7671 0.732796 38,000,000 27,846,243 0.8432 0.007407 0.8625 0.868889 35,000,000 30,411,111 0.8244 -0.1441 0.5985 0.512254 33,000,000 16,904,394 1.908 -0.2 1.9382 1.55056 34,000,000 52,719,040 127,880,788

7 0.9806 -0.1305967 0.7671 0.666919 38,000,000 25,342,933 0.8137 -0.03499 0.8625 0.832325 35,000,000 29,131,367 0.7325 -0.11148 0.5985 0.531782 33,000,000 17,548,813 1.6145 -0.15383 1.9382 1.640054455 34,000,000 55,761,851 127,784,964

8 0.902 -0.080155 0.7671 0.705613 38,000,000 26,813,298 0.8038 -0.01217 0.8625 0.852006 35,000,000 29,820,219 0.6546 -0.10635 0.5985 0.534851 33,000,000 17,650,071 1.4506 -0.10152 1.9382 1.741438786 34,000,000 59,208,919 133,492,507

9 0.8278 -0.0822616 0.7671 0.703997 38,000,000 26,751,890 0.757 -0.05822 0.8625 0.812282 35,000,000 28,429,880 0.4776 -0.27039 0.5985 0.436669 33,000,000 14,410,081 1.1565 -0.20274 1.9382 1.545242176 34,000,000 52,538,234 122,130,084

10 0.6809 -0.1774583 0.7671 0.630972 38,000,000 23,976,925 0.7153 -0.05509 0.8625 0.814988 35,000,000 28,524,595 0.4985 0.04376 0.5985 0.624691 33,000,000 20,614,791 1.4445 0.249027 1.9382 2.420864591 34,000,000 82,309,396 155,425,708

11 0.6648 -0.0236452 0.7671 0.748962 38,000,000 28,460,548 0.7241 0.012303 0.8625 0.873111 35,000,000 30,558,883 0.5235 0.05015 0.5985 0.628515 33,000,000 20,740,996 1.4745 0.020768 1.9382 1.978453375 34,000,000 67,267,415 147,027,842

12 0.7225 0.08679302 0.7671 0.833679 38,000,000 31,679,799 0.813 0.122773 0.8625 0.968392 35,000,000 33,893,713 0.6575 0.255969 0.5985 0.751698 33,000,000 24,806,024 1.8715 0.269244 1.9382 2.460048355 34,000,000 83,641,644 174,021,181

13 0.8555 0.18408304 0.7671 0.90831 38,000,000 34,515,784 0.8382 0.030996 0.8625 0.889234 35,000,000 31,123,201 0.6283 -0.04441 0.5985 0.57192 33,000,000 18,873,368 1.8095 -0.03313 1.9382 1.873990329 34,000,000 63,715,671 148,228,024

14 0.7831 -0.0846289 0.7671 0.702181 38,000,000 26,682,885 0.8518 0.016225 0.8625 0.876494 35,000,000 30,677,300 0.5876 -0.06478 0.5985 0.55973 33,000,000 18,471,103 1.5772 -0.12838 1.9382 1.689377751 34,000,000 57,438,844 133,270,131

15 0.7671 -0.0204316 0.7671 0.751427 38,000,000 28,554,222 0.8625 0.012562 0.8625 0.873334 35,000,000 30,566,704 0.5985 0.01855 0.5985 0.609602 33,000,000 20,116,872 1.9382 0.228887 1.9382 2.381828075 34,000,000 80,982,155 160,219,954

ANSWER TO QUESTION A (continued): Table 2

1. The standard deviation of the US Dollars revenues from all countries in aggregate is $14,512,605.99.

2. The 68 percent confidence level is from $140,125,434.15 to $147,839,756.41

3. The 95 percent confidence level if from $136,638,338.28 to $151,326,852.29

AUSTRALIA CANADA NEW ZEALAND BRITISH POUND TOTAL ALL

COUNTRIES

standard deviation 2,794,712.88 1,539,133.49 2,377,260.15 10,807,872.11 14,512,605.99

min 28,331,078.25 29,959,747.56 19,168,262.56 66,523,506.91 143,982,595.28

68% Confidence Interval 742,778.93 409,070.97 631,828.32 2,872,516.78 3,857,161.13

- 27,588,299.32 29,550,676.59 18,536,434.24 63,650,990.14 140,125,434.15+ 29,073,857.17 30,368,818.54 19,800,090.88 69,396,023.69 147,839,756.41

95% Confidence Interval 1,414,293.87 778,894.70 1,203,037.52 5,469,437.43 7,344,257.00

- 26,916,784.38 29,180,852.86 17,965,225.04 61,054,069.48 136,638,338.28+ 29,745,372.11 30,738,642.26 20,371,300.08 71,992,944.35 151,326,852.29

ANSWER TO QUESTION B:

A$ C$ NZ$ Pound

A$ 1.00

C$ .35 1.00

NZ$ .41 .39 1.00

Pound .30 .17 .82 1.00

From the table above (the correlation coefficient matrix), shows some positive correlation among all the countries.

From the table above, it shows that the aggregate dollar cash inflows of Whaler is more uncertain than if exchange rate movements were completely independent.

If one currency declines in value, the other currencies would probably decline as well.

ANSWER TO QUESTION C:

The executive approach is perhaps slightly easier to use however it may be less reliable.

In the case of Whaler, they does not use the past exchange rate data to stimulate those actual exchange rates but to stimulate the annual percentage changes in the exchange rates.

ANSWER TO QUESTION D:

Referring to the table 2 (slide 4), is the calculation for items below:

AUSTRALIA CANADA NEW ZEALAND BRITISH POUND TOTAL ALL

COUNTRIES

standard deviation 2,794,712.88 1,539,133.49 2,377,260.15 10,807,872.11 14,512,605.99

min 28,331,078.25 29,959,747.56 19,168,262.56 66,523,506.91 143,982,595.28

68% Confidence Interval 742,778.93 409,070.97 631,828.32 2,872,516.78 3,857,161.13

- 27,588,299.32 29,550,676.59 18,536,434.24 63,650,990.14 140,125,434.15

+ 29,073,857.17 30,368,818.54 19,800,090.88 69,396,023.69 147,839,756.41

95% Confidence Interval 1,414,293.87 778,894.70 1,203,037.52 5,469,437.43 7,344,257.00

- 26,916,784.38 29,180,852.86 17,965,225.04 61,054,069.48 136,638,338.28

+ 29,745,372.11 30,738,642.26 20,371,300.08 71,992,944.35 151,326,852.29

ALL GROUP MEMBERS HAVE EQUALLY

PARTICIPATED IN THIS CASE SOLUTION