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Course: FIN444
Course Name: International Financial Management
Section 05
Group Assignment- 1 Investment in The Foreign Exchange Market
Prepared for
Dr. Tanvir Nabi Khan.
Assistant Professor, Department of Accounting & Finance.
North South University
Prepared by
Group 4 | FIN444 | Section 05
Walid Zubaer 1511644030
Kazi Rejwanul Islam Rifat 1712046030
Dipta Sarkar 1821069030
Syed Ashik E Khoda 1831414630
Sanjida Alam Jui 1921137030
Fahima Khan Nourin 1922133630
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Letter of Transmittal

January 03, 2022

Dr. Tanvir Nabi Khan
Assistant Professor
Department of Accounting & Finance
North South University
Bashundhara, Dhaka-1229, Bangladesh
Subject: Submission of an assignment on Investment in The Foreign
Exchange Market.
Dear Sir, In this study, we have tried to implement our learning from the
course. We believe it will boost our future skills and establish baseline
data regarding the course. Despite many limitations, we have tried our
best to make this study reliable and accurate. We would like to thank
you for allowing us to work on this study, which helped us gain extra
knowledge about the topics we learned in that course.
Sir, we appreciate that you allowed us to work on this study and your
constant kindness and cooperation.
Sincerely yours,
Walid Zubaer
Kazi Rejwanul Islam Rifat
Dipta Sarkar
Syed Ashik E Khoda
Sanjida Alam Jui
Fahima Khan Nourin
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Group 4 | FIN444 | Section 05

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Executive Summary
The Foreign Exchange market makes it possible for businesses,
companies, and individuals to conduct international commerce and
investment by enabling them to exchange one currency for another. The
short-term nature of the currency market means that it has very tight and
transparent pricing, tremendous speculative values, and short tenors of
transactions. Foreign exchange markets were among the earliest
financial markets to emerge, assisting in shaping the developing global
economy. We were given a ten-million-dollar budget to invest in the
currency market for this study. For 30 days, we invested the funds in
Euros (€), Swiss Francs (CHF), Japanese yen (¥), British Pounds (£),
Canadian Dollars (C$), SWEDISH KRONA (SEK) and Australian
Dollars (AU$) these currencies were appreciating. Finally, we
discovered that investing in numerous currencies resulted in a highly
favorable return on our portfolio, totaling $2,029,384.95 in profit.
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Contents
Letter of Transmittal.................................................................................2
Executive Summary..................................................................................3
Introduction...............................................................................................5
Investment in British Pound GBP (£).......................................................6
Investment in Euro (€)..............................................................................7
Investment in CANADIAN DOLLAR (C$).............................................8
Investment in SWISS FRANC (CHF)......................................................9
Investment in...........................................................................................10
Investment in SWEDISH KRONA (SEK) Kr........................................11
Investment in Australian dollar (AUD)..................................................12
Holding Period Calculation....................................................................13
Conclusion..............................................................................................14
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Introduction
We were assigned a 55 million dollars budget to invest in the currency
market. We divided the budget into seven unequal halves and invested in
various currencies.
The entire cash was allocated and invested; the portfolio was held for the
entire month until November 19, 2022. The investment allocation table
below displays the amounts assigned to each currency based on the
weights assigned to them.

Portfolio Investment Allocation Percentage Amount out of

55million
British Pounds (£), 30% $16,500,000

Euros (€), 15% $8,250,000

Canadian Dollars (C$), 10% $5,500,000

Swiss Francs (CHF), 10% $5,500,000

Japanese yen (¥), 20% $11,000,000

SWEDISH KRONA (SEK) 10% $5,500,000

Australian Dollars (AU$) 5% $2,750,000

Total $55000000

Investment in British Pound GBP (£)

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Holding period: October 19 to November 19

October 19 Bid/Ask - £0.88777/$ - £0.88798/$

November 19 Bid/Ask - $1.1880/£ 1.1887/£

Investment in British Pound (£) $16,500,000

Investment value (GBP) (£) on October $16,500,000 * £0.88798/$=

GBP 14,651,611
19, 2022
Conversion of GBP (£) to USD ($) on GBP 14,651,611
* 1.1880 = $17,406,114.25
November19, 2022
Profit/Loss from investment in GBP (£) $17,406,114.25-$16,500,000 =
$906,114.25

The GBP were the first currency in which we invested. On the day we
invested, the asking price was £0.88798/ $ (indirect rate), and the bid
price on the last day of the holding period was $1.1880/£ (direct rate).
We can see here that the British Pound GBP has appreciated in terms of
the USD, as we had predicted, and we know that we should always
invest in currencies that appreciate. We got a profit of $$906,114.25 by
investing in this currency. The graph above depicts the fluctuations in
the GBP/USD exchange rate over 30 days.

Investment in Euro (€)

Holding period: October 19 to November 19

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October 19 Bid/Ask =€0.9802/$ - €0.9804/$

November 19 Bid/Ask Price =$1.0320/€ $1.0323/€

Investment in Euro (€) $8,250,000

Investment value on Euro $8,250,000 *€0.9804= (€) EUR

EUR 8,088,184.50
(€) October 19, 2022
Conversion of Euro (€) to EUR 8,088,184.50
*$1.032= $8,347,006.40
USD ($) on November19,
Profit/Loss from $8,347,006.40- $8,250,000 = $97,006.40
investment in Euro (€)
The EURO (EUR) is the second currency in which we have made an
investment against the US Dollar (USD). €0.9804/$ (indirect rate) was
the ask price on the day we made our investment, and $1.0320/€ (direct
rate) was the bid price on the last day of the holding term when we sold.
We can see that the EUR has appreciated in relation to the US dollar in
the 30 days period. By investing in this currency, we generate a profit of
$$435,760.92

Investment in CANADIAN DOLLAR (C$)

Holding period: October 19 to November 19

October 19 Bid/Ask Price =CAD1.37614/$ -
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CAD1.37631/$
November 19 Bid/Ask Price =$0.7467/CAD -
$0.7472CAD

Investment in (C$) $5,500,000

Investment value on (C$) $5,500,000 *1.3763128 = (C$)

7,569,721
October19, 2022
Conversion of (C$) to USD ($) (C$)*$0.7467= $5,652,310.35
on November19, 2022
Profit/Loss from investment in $5,652,310.35- $5,500,000 =
$152,310.35
(C$)
Our third currency investment is in the Canadian Dollar (C$). We
invested at the exchange rate of CAD1.37631/$ (indirect rate) as the
ask price. Having it held for 30 days, we have converted our investment
amount back into USD at $0.7467/CAD (direct rate) as the bid price.
We have incurred a profit of $152,310.35

Investment in SWISS FRANC (CHF)

Holding period: October 19 to November 19

October 19 Bid/Ask Price =CHF1.00077/$ -

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CHF1.00100/$
November 19 Bid/Ask Price =$0.954563/CHF -
$0.955019/CHF

Investment in (CHF) $5,500,000

Investment value on (CHF) $5,500,000 *1.00100 = CHF 5,505,494

October19, 2022
Conversion of (CHF) to USD ($) on CHF 5,505,494*0.95456281=
$5,255,340.29
November19, 2022
Profit/Loss from investment in $5,255,340.29- $5,500,000 = -
$244,659.71
(CHF)

We can see here that Swiss Franc (CHF) has risen against the US Dollar
(USD), which is precisely what we predicted, so we converted the
money back to USD and invested that money in the Swiss Franc (CHF)
for the next 30 days. By investing in this currency, we made a -
$244,659.71 loss. The ask price was CHF1.00100/$ (indirect) and the
bid price was $0.954563/CHF (direct).

Investment in Japanese Yen (¥)

Holding period: October 19 to November 19

October 19 Bid/Ask Price =¥149.56626/$ -

¥149.58863/$
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November 19 Bid/Ask Price =0.00710$/¥ - 0.00710$/¥

Investment in Yen (¥) $11,000,000

Investment value on Yen (¥) $11,000,000*149.5886313 =

Yen (¥) JPY 1,645,474,944
October19, 2022
Conversion of Yen (¥) to USD ($) on Yen (¥) JPY
1,645,474,944*149.56626=
November19, 2022
$11,682,872.10
Profit/Loss from investment in Yen $11,682,872.10- $11,000,000 =
$682,872.10
(¥)
The currency in which we invested was the Japanese (YEN). The ask
price (indirect) on the day we invested was ¥149.58863/$ (indirect
rate), and the bid price on November 23 of the holding period was
$0.0071/YEN (direct rate). We can see here that the Japanese (YEN)
has appreciated against the USD in those 30 days period. We made
profit $682,872.10 by investing in this currency.

Investment in SWEDISH KRONA (SEK) Kr

Holding period: October 19 to November 19

October 19 Bid/Ask = SEK 11.16258 /$ SEK

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11.16932/$
November 19 Bid/Ask Price =$0.09390/SEK -
$0.09400/SEK

Investment in (SEK) Kr $5,500,000

Investment value on (SEK) Kr $5,500,000 *11.1693157 =

SEK 61,431,236
October19, 2022
Conversion of (SEK) Kr to USD SEK 61,431,236* 0.0939$=
$5,768,393.07
($) on November19, 2022
Profit/Loss from investment in $5,768,393.07- $5,500,000 =
$268,393.07
(SEK) Kr
The Swedish Krona (SEK) was the seventh currency we invested in. The
bid price (direct) on the last day of the holding period was
$0.0939/SEK, while the ask price (indirect) on the day we invested was
$11.16932/SEK. The graph above depicts the fluctuations in the
SEK/USD exchange rate over a 30-day period. We made a profit of
$268,393.07.

Investment in Australian dollar (AUD)

Holding period: October 19 to November 19

October 19 Bid/Ask = AUD1.58985/$

AUD1.59025/$
November 19 Bid/Ask Price = $0.66710/AUD$
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$0.66780/AUD$

Investment in (AUD) $2,750,000

Investment value on (AUD) $2,750,000 *1.5902473=

AUD 4,373,180
October19, 2022
Conversion of (AUD) to USD ($) on AUD 4,373,180* 0.6671 =
$2,917,348.49
November19, 2022
Profit/Loss from investment in $2,917,348.49- $2,750,000 =
$167,348.49
(AUD)
The Australian dollar (AUD) was the seventh currency we invested in.
The bid price (direct) on the last day of the holding period was $0.6671
/(AUD), while the ask price (indirect) on the day we invested was
AUD1.59025/$. The graph above depicts the fluctuations in the
AUD/USD exchange rate over a 30-day period. We made a profit of
$167,348.49.
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Holding Period Calculation

Portfolio Investment Return To USD Beginning value
Allocation
British Pounds (£), $17,406,114 $16,500,000

Euros (€), $8,685,761 $8,250,000

Canadian Dollars (C$), $5,652,310 $5,500,000

Swiss Francs (CHF), $5,255,340 $5,500,000

Japanese yen (¥), $11,682,872 $11,000,000

SWEDISH KRONA (SEK) $5,768,393 $5,500,000

Australian Dollars (AU$) $2,917,348 $2,750,000

Total $57,368,139.46 $55000000

Holding Period Return ($57,029,384.95 - 3.7%

$55000000)/$5500000
0
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Conclusion

In the end, based on the course material and our personal observations,
we chose to withdraw the currency that was expected to depreciate and
invest in the currencies that were expected to appreciate against the
USD. We returned to our home currency and ended up with more than
we started with.

Following the exchange rate calculations, we determined that investing

in multiple currencies resulted in a significantly positive return on our
portfolio, resulting in a profit of
{$906,114.25 + $97,006.40+ $152,310.35 -$(244,659.71) +$682,872.10
+$167,348.49+ $268,393.07} = $2,029,384.95

The Holding Period Return = 3.7%

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