Research Method Assignment Essay

Submitted By nartuo23
Words: 3077
Pages: 13


Tutor: Prof Kostas Nikolopoulos Jingwen Yang (500347253)

(Word count 2200)

Executive Summary:
USASuperCars is a luxury sports car company and has signed a contract to sell a batch of cars to seven customers in five different countries. As the Global Car industry experienced a significant decline during the global recession. They have to reduce all kinds of risk for example exchange rate risk in order to survive. The study investigated the financial decision for USASuperCars to whether is worth company to take bank’s offer to avoid the financial risk. The study consisted of an analysis of company current statistic situation, bank offers and the bank’s risk. The conclusion drawn from the analysis is that company take the bank’s offer to avoid financial risk. A number of recommendations are made concerning about the less revenue to be get compared with expected return after take the offer and the time period of the offer.

Table of Content:
Executive Summary 2
Table of Contents 3
1. Introduction 4
2. Findings and discussions: 5
2.1 Basic statistic information about USASuperCars 5
2.1.1 Distribution, mean and standard deviation of certain renvenue 5
2.1.2 Probability of the revenue level 6
2.2 HSBC offers 6
2.2.1 The benefit and drawback of USASuperCars take the offer 6
2.2.2 The impact of the offer time changing 6
2.3 The Bank’s risk, cost and options 7
2.3.1 The Bank’s risk 7
2.3.2 The probability of the bank incur a loss 7
2.3.3The Value at risk and expected return 7
2.3.4 Other option for bank if not convert all/ some currencies 8
3. Conclusions and Recommendations 8
4. Appendix 10
Reference 15

USASuperCars is a luxury sports car company and has signed a contract to sell a batch of cars to various global customers, for example UK, Japan, Canada, South Africa and USA. The selling price of the Cars is fixed in the local currency, the company plans to convert the local currency at the exchange rate prevailing at the time of delivery, therefore they may suffer or gain from foreign exchange in cross-border transactions due to uncertainty exchange rate.
The purpose of this report is to make a financial decision for USAsuperCars to reduce the risk and increase profitability about (i) discuss that