International Banking and Finance - Assignment
Added on 2021-04-21
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Running head: INTERNATIONAL BANKING AND FINANCEInternational Banking and FinanceName of the Student:Name of the University:Author’s Note:Course ID:
1INTERNATIONAL BANKING AND FINANCEExecutive Summary:The current report intends to evaluate the stock value change of Suncor Energy from 31stAugust 2017 to 8th March 2018. Suncor Energy is an integrated energy organisation in Canadaspecialising in the production of synthetic crude from oil sands. It has been evaluated that CNDis traded on the CME Globex futures market and the forex market through currency pairings.However, the value of the currency has increased subsequently after the mid of January 2018,since USD currency has increased in value. For managing exchange risk, Suncor Energy usesforward contract, which is a non-standardised contract between two parties for purchasing orselling an asset at a particular future time at an agreed price in today’s date.
2INTERNATIONAL BANKING AND FINANCETable of Contents1. Introduction:................................................................................................................................32. Analysis:......................................................................................................................................32.1 Change in the stock value of Suncor Energy from 31 August 2017 to 8 March 2018:.........32.2 Cash flow per share of Suncor Energy for the past five years:.............................................42.3 Percentage of revenue made from domestic and international sales:....................................52.4 Strength/weakness of the US/CDN dollar over the past three months in contrast to theglobal currencies:.........................................................................................................................72.5 Types of exposures and way of managing these exposures to exchange rate risk:...............82.6 Required rate of return or cost of capital of Suncor Energy:.................................................92.7 Reasons behind the change in stock price of Suncor Energy from 31 August 2017 to 8March 2018:...............................................................................................................................103. Conclusion:................................................................................................................................11References:....................................................................................................................................12Appendices:...................................................................................................................................14
3INTERNATIONAL BANKING AND FINANCE1. Introduction:The current report intends to evaluate the stock value change of Suncor Energy from 31stAugust 2017 to 8th March 2018. Suncor Energy is an integrated energy organisation in Canadaspecialising in the production of synthetic crude from oil sands. In order to evaluate itsperformance, the cash flow per share of the organisation has been considered for the past fiveyears. The revenue made from domestic and international sales have been taken into account aswell. The capability of the US/CDN dollar has been illustrated over the past three monthscompared to the global currencies. The kinds of exposures have been described along with theway of managing these exposures. The next segment of the report would focus on computing thecost of capital for the organisation. Finally, the report sheds light on explaining the reason behindthe stock price change in the stated period. 2. Analysis:2.1 Change in the stock value of Suncor Energy from 31 August 2017 to 8 March 2018:The percentage increase or decrease in the stock value of Suncor Energy for the statedperiod has been presented in the form of a table (Refer to Appendices, Appendix 1). It has beenobserved that the stock price of the organisation has increased by 0.07% in this stated period.However, fluctuations could be seen everyday due to change in the market forces. This denotesthat there is change in the prices of shares because of demand and supply (Avdjiev, McCauley &Shin, 2016). In case, more investors prefer to purchase the stock of Suncor Energy rather thanselling, it would lead to rise in share price and thus, demand increases compared to supply. Onthe other hand, if more investors prefer to sell the stock of the organisation, share price wouldfall and thus, supply would be higher than demand.
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