Question
Can you provide some guidance on how i can approach the following assignment below. Part A - Suppose you are a Chief Financial Officer (CFO)
Can you provide some guidance on how i can approach the following assignment below.
Part A - Suppose you are a Chief Financial Officer (CFO) of a UK based listed company. The company is currently trading at 10 per share and have 10 million shares in issue. The total market value of the issued share capital of the company is 100 million. You have been requested to write a report to the board of directors on how you aim to raise an additional 50 million to fund the next development stage in the international project.
Part B - This additional funding will allow the company to expand globally and do business in the markets of numerous countries where payment can be made using the local currency. The directors are conservative in their attitude to risk. You have been requested to provide a report to the directors critically evaluating alternative derivatives including forwards, futures, options and swaps that are available in the market in order to minimise the risk with respect to payment in international currencies.
Note for Part A: For the report in Part A, you should critically review the advantages and disadvantages of the main funding options and have appropriate academic references to strengthen your discussions. In your analysis, you should review the different types of financing choices available in the equity and debt markets, and discuss how beneficial interest rate swaps are in reducing financing costs and eliminating interest-rate risk.
Note for Part B: For the report in Part B, you should critically discuss and compare the use of derivatives including forwards, futures, options and swaps to hedge Foreign Exchange (FX) Risk. With reference to appropriate academic references, discussions must include: how it works in mitigating FX risk. advantages and disadvantages of each type of derivative in managing FX risk. Information on the written assessme
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