Investment Plan - Investment Plan G Francis T Investment...

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Investment Plan G Francis T Investment plan 2011 Table of Contents 1. Introduction 3 2. Why the Currencies 4 3. Macro-analysis 5 4.1 The political situation 8 4.2 Investment climate 9 4.3 Threats to the Colombian Market 9 5.4.1 Risks of the fluctuation of the Colombian Peso interest rate 10 5. 3 scenarios 11 5.1 Scenario 1 11 5.2 scenario 2 14 6.3 Scenario 3 15 6. Advice 16 7. Bibliografy 17 1. Introduction The two currencies that have been chosen for this report are the Colombian peso and the US Dollar. The bank of Utrecht will consider the possible investing situations based on the 3 scenarios presented on these reports with the different hedging techniques and the possible return on investment the project can make against the risk taken. The 3 scenarios used will display what could
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possibly take place in the countries the bank of Utrecht will partake in. The two currencies will be borrowed from one country and lent to other on the basis that the currency will appreciate on the long term and the interest rate that will be compounded will help the bank of Utrecht make the decision to how exposed it will want to be when running the risks in those countries. There will be a macro-analysis of the USA and Colombia, analyzing the possible the economic, political and the yield curve of the interest the currency will be that is invested in. 2. Why the Currencies The reason why the Colombian Peso and the United States Dollar was chosen, was because the Colombian currency is showing signs of appreciating in the future. The prime interest rate in the South American country, Colombia, is approximately 8,7% right now and it is continuing to stabilize due to government increase in their trade balance. By using the prime interest rate of the USA that is right now 3,25% the Bank of Utrecht will try to invest and diversify its investments in Colombia. Because the currency seems to be gaining strength and won’t trade higher than resistance of $2040.00 Colombian Peso per Dollar and the support level of $1760.00 COP/USD. Interest Rates, 1995 - 2008 | The reason why the bank of Utrecht will use the prime interest rate is because the bank of Utrecht is an above average credit worthy partner for other financial institutions and due to that reliability the bank of Utrecht will adhere to the given prime interest rate. 3. Macro-analysis Indicators - 09/01/2011 | 4. Inflation | | | Inflation Target | 2.0%-4.0% | | Annual Inflation December | 3.17 | | Real Value Unit (RVU) 09/01/2011 | 190.9350 | | Interest rates - 09/01/2011 | | |
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Intervention Rate | 3.00% | | Interbank Rate | n.d. | | Deposits to Fixed Terms (DTF) Rate | 3.50 | | IBR | | | IBR Overnight 07/01/2011 | 2.961 | | IBR 1 Month 04/01/2011 | 2.980 | | Market Exchange Rate - 09/01/2011 | | | Exchange Rate - 09/01/2011 | 1,859.97 | | Nominal Depreciation – Last 12 months | -5.50 | | Colombia The Colombian economy has been growing in a fast pace the last couple of years, with an average of 4% the last couple of years, the economy and the 3rd country that is most invested in South
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This note was uploaded on 01/26/2012 for the course BUSINESS BUS 520 taught by Professor Dr.mohamed during the Spring '11 term at Strayer.

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Investment Plan - Investment Plan G Francis T Investment...

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