Individual Assignment
Due date: 13:00 on 13th October 2022 (Thursday)
Weight: This assignment is out of 20 marks and is worth 20% of your final grade
YOUR INSTRUCTIONS
There are 5 questions to this assignment.
a) For Qs 2, 3 and 4: You will need to upload your assignment via the link on Blackboard.
The file must be in PDF. You can submit your assignment multiple times until the due
date. However, only the last submission will be marked. You would also need to submit
this file through TurnItIn for plagiarism analysis (see more information below).
b) For Q1 and Q5, Please submit ONLY one Excel workbooks that combines Q1 and Q5
(you can use multiple tabs/spreadsheets), via the Blackboard Assessment link.
1. For Q1, please use an Excel Spreadsheet to show your raw data, calculation and
explanation.
2. For Q5: you need to design an Excel Spreadsheet to show all your calculations.
c) Please make sure you submit both a PDF file and an Excel Spreadsheet using the one
submission attempt, rather than submitting each file using two attempts. That is
because each attempt will overwrite all previous attempts including the files submitted
in those attempts.
Please make sure you have your full name and student number on every page of your
assignment (i.e., insert a Header).
Your PDF document should be typed in Times New Roman font, size 12. The
assignment should be double spaced and have margins of 2.54 cm.
The teaching staff will not answer any questions regarding the assignment as this gives
students an unfair advantage over others. However, you may post any questions to the
assignment discussion board on Blackboard and they will be answered there.
Note that your assignment will be analysed for plagiarism using TurnItIn. Once you are
satisfied with the TurnItIn similarity report for your PDF file, that copy becomes your
final copy. See for instructions https://www.library.uq.edu.au/library-services/turnitin-
assignments (link on BB with the assignment). Please submit your PDF version of your
file to TurnItIn as well, in addition to the instruction in (c) above.
Late submissions will lose marks as per the ECP.
Please ensure you reference appropriately and correctly in each question. For example,
your references for Q1 should be at the end of Q1, NOT at the end of the document.
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Please start each question on a separate page.
In terms of word count, please use a maximum of 150 words per mark as a guide. For
example, 2 marks = 300 words max)
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Questions 1 to 4: International Monetary System/International Parity
Conditions/Balance of Payments [14 marks in total]
In this part of the assignment, you will be investigating the cryptocurrency market and
international parity conditions.
1) Using daily close data, please plot the following two exchange rates on the same chart:
i) the exchange rate between RMB and USD from 1 July 2017 to 30 June 2022; and
ii) the exchange rate between Bitcoin (BTC) and USD from 1 July 2017 to 30 June
2022.
Indicate one specific point on each of these two lines where the trend changes, and
provide some reason(s) why this is the case.
(Hint: Please clearly mark the legend and the relevant information on the axes, and
provide data sources. You can use the left axis for the RMB/USD exchange rate,
while using the right axis for the BTC/USD exchange rate. Please note that you
should create a chart on your own rather than copying from other sources.)
(4 marks)
2) El Salvador became the first country to adopt bitcoin as a legal tender on 7 Sept 2021.
Do you think this is the right move? And why? (2 marks)
3) Please briefly comment on the rationale of the cash rate decisions from the Reserve
Bank of Australia between 1 April till 30 Sept 2022. Which industries will likely to be
the winners or losers of these cash rate decisions, and discuss why? (3 marks)
4) According to CNN, Sri Lankan Prime Minister Ranil Wickremesinghe said that his
country was “bankrupt” on 5 July 2022. A Wall Street Journal article by Tankah Ishan
(2022)1 mentioned that some critics argued that loans from Beijing may play a role in
this so-called “debt-trap diplomacy”, meaning loans were granted to make the country
dependent on China. Please discuss whether you agree or disagree with the criticism
above, and why. (3 marks)
Note: 2 marks will be allocated for correct grammar and clear and logical writing.
1 You can obtain the article from WSJ directly via the UQ library or it is available to download from the
assignment folder via Blackboard. Sri Lanka's Debt Crisis Tests China's Role as Financier to Poor Countries;
Developing world faces a credit crunch, but the biggest lender of all has been slow to cooperate with Western-
style rescues. Tankha, Ishan. Wall Street Journal (Online); New York, N.Y. [New York, N.Y]. 13 July 2022
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Q5 International Portfolio Theories [Total: 6 marks]
For Part 2, you only need to submit your designed spreadsheet (no other files, i.e., PDF) via
Blackboard.
Using the monthly return data for USA (U), China (C) and the Japan (J) between Jan 2000 and
June 2022, calculate the following three items for Countries U, C and J:
(3 marks)
a) Annualised mean returns
b) Annualised standard deviation of returns
c) Return covariances between these three countries
Please present the following table with answers in your excel spreadsheet. Please include the
raw data and the formula you used in your excel spreadsheet.
Country U Country C Country J
Yearly Mean Return
Yearly Standard deviation (Returns)
Portfolio Risk (% pa)
Example ONLY: Efficient Frontier (2000 - 2020)
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To come up with an efficient frontier, you will need to design your Excel spreadsheet to
calculate the optimal portfolio weight for each of these three countries (U, C and J) to maximise
the portfolio returns while achieving a range of target sigma.
[Hint: You may try any target sigma ranges between 0.10 and 0.30 and plot an incremental
interval of 0.01 (i.e., 0.10, 0.11, 0.12, …, 0.30) in your figure.]
To calculate the optimal portfolio weight, you can try to use the “solver” function in Excel.
Please note that portfolio weights are not restricted to positive values only.
You must save the answer for target sigma = 0.15 as a scenario in your Excel spreadsheet for
marking. For example, please save your answer for (Q5d) as “Q5d”.