International Finance

This document provides answers to questions related to international finance, including the impact of stock prices on market indices and the correlation between stock prices and currency conversion rates. It discusses the stock prices and percentage changes of various companies over an 8-week period, as well as the correlation between stock prices and market indices. It also explores the influence of currency conversion rates on stock prices.

Running head: INTERNATIONAL FINANCE
International Finance
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Answer to question 1.a)..............................................................................................................2
Answer to question 1.b).............................................................................................................3
Answer to question 2)................................................................................................................3
Answer to question 3.a)..............................................................................................................5
Answer to question 3.b).............................................................................................................6
Answer to question 3.c)..............................................................................................................7
Answer to question 4.a)..............................................................................................................8
Answer to question 4.b).............................................................................................................8
Answer to question 5.a)..............................................................................................................9
Answer to question 5.b).............................................................................................................9
References:...............................................................................................................................10
Appendices:..............................................................................................................................11

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Answer to question 1.a)
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.300 3.483% Bank inquiry being testified
Wesfarmers Limited 31.890 0.918% Positive analyst review on share price movement
Genesis Energy Limited 2.320 -2.521% Presentation provided to shareholders
Auckland International Airport Limited 6.650 -1.917% Boad member has been appointed
Portfolio Average -0.009%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.230 -0.098% Embarced by wrongdoing of the workers
Wesfarmers Limited 31.590 -0.941% Market movement
Genesis Energy Limited 2.360 1.724% Ongoing disclosures by the organisation
Auckland International Airport Limited 6.680 0.451% Improvement in performance
Portfolio Average 0.284%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 70.370 -1.207% Market movement
Wesfarmers Limited 31.950 1.140% Positive analyst review on share price movement
Genesis Energy Limited 2.400 1.695% Notice for disclosures
Auckland International Airport Limited 6.890 3.144% Adoption of Tahitian Dreamline
Portfolio Average 1.193%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 68.810 -2.217% Market movement
Wesfarmers Limited 31.280 -2.097% Market movement
Genesis Energy Limited 2.450 2.083% Notice for disclosures
Auckland International Airport Limited 6.660 -3.338% occurance of fire incident
Portfolio Average -1.392%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 68.480 -0.480% Australia housing worst quarter
Wesfarmers Limited 31.430 0.480% Impact from Coles
Genesis Energy Limited 2.440 -0.408% Disclosure Notices (D&O Ongoing)
Auckland International Airport Limited 6.770 1.652% Return on equity report by analyst
Portfolio Average 0.311%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.910 5.009% News airticle from Analyst
Wesfarmers Limited 32.530 3.500% Market movement
Genesis Energy Limited 2.500 2.459% Market movement
Auckland International Airport Limited 6.800 0.443% Market movement
Portfolio Average 2.853%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.890 -0.028% Market movement
Wesfarmers Limited 32.080 -1.383% Market movement
Genesis Energy Limited 2.440 -2.400% Market movement
Auckland International Airport Limited 6.920 1.765% Market movement
Portfolio Average -0.512%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.660 -0.320% Warren Buffet to buy CBA
Wesfarmers Limited 31.950 -0.405% Positive analyst review on share price movement
Genesis Energy Limited 2.450 0.410% FY19 interim report disclosed
Auckland International Airport Limited 6.840 -1.156% Market movement
Portfolio Average -0.368%
Week 3 07-12-2018
Week 4 14-12-2018
Week 8 11-01-2019
Week 5 21-12-2018
Week 6 28-12-2018
Week 7 04-01-2019
Week 1 23-11-2018
Week 2 30-11-2018
The calculations conducted in the above table helps in identifying the return
generation capability of the created portfolio. The portfolio average returns of per week are

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also calculated to identify the changes in portfolio income, which is affected from news and
articles. The above figure provide information regarding the changes in share price value of
the selected stocks during the period of 8 weeks and depicts the major reason behind the price
movement. Investors create the portfolio by analyzing the current and future trends of the
organization, which eventually helps in supporting the short-term trades.
Answer to question 1.b)
Stock 16 November 2018
11 January
2019 Return
Commonwealth Bank of Australia 68.90 71.66 4.01%
Wesfarmers Limited 31.60 31.95 1.11%
Genesis Energy Limited 2.38 2.45 2.94%
Auckland International Airport
Limited
6.78 6.84
0.88%
Returns from the portfolio 2.23%
The portfolio returns is calculated in the above table, which indicates that return of
2.23% has been generated during the 8-week investment. The maximum returns were
generated from Commonwealth Bank of Australia, as it yielded a return of 4.01% in 8 weeks.
On the other hand, Auckland International Airport Limited generated the lowest returns of
0.88% during the investment period of 8 weeks.
Answer to question 2)

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Figure 1: ^AXJO Index and CBA
(Source: Au.finance.yahoo.com 2019)
The Australian index directly influences the share price value of Commonwealth
Bank of Australia, as the figure directly indicates the Similarity between the price movement
patterns. Both the organization and the Australian index relatively moves at a similar pace
and direction, which directly indicates that the share price value of CBA is influenced by
AXJO index.
Figure 2: ^AXJO Index and WES
(Source: Au.finance.yahoo.com 2019)
The price action of both the Australian index and Wesfarmers Limited is considered
to be similar in nature, as both their return generation capability is relevant similar. However,
from 14th December until 16th December the price action of Wesfarmers did not correlate
with the Australian index. This is the main reason why the share price of the organization
increased even when the actual index was declining in value. Currently, the share price
movement of the organization is in correlation with the Australian index.

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Answer to question 3.a)
Figure 3: ^NZ50 Index and GNE
(Source: Au.finance.yahoo.com 2019)
Genesis Energy Limited and the New Zealand index have a similar price action,
which can be identified from the above figure. The decline in the share value of Genesis
Energy Limited has been supported by the reducing value of New Zealand index. Therefore,
it could be understood that the New Zealand index directly influences the price action of
Genesis Energy Limited.
Figure 4: ^NZ50 Index and AIA
(Source: Au.finance.yahoo.com 2019)

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Figure 4 states the similarity between the price action of New Zealand index and
Auckland International Airport Limited during the time period of 8-weeks. The similar price
action directly indicates that the Share price of the organization is influenced by the New
Zealand index, which is why there is a similarity between their returns. Auckland
International Airport Limited is situated in New Zealand, which is why the New Zealand
market influences their share price.
Answer to question 3.b)
Figure 5: GNE and AIA
(Source: Au.finance.yahoo.com 2019)
The above figure directly highlights the share price correlation between Auckland
International Airport Limited and Genesis Energy Limited, which is considered highly
positive. Moreover, high correlation is between the two organizations, as the return
generation pattern is similar in nature, as depicted in the above figure. The high correlation
shares will eventually allow the investors to create a Portfolio that could generate higher
Returns by reducing the level of risk situated with Investments. However, during the period
of 10 December to 14 December the price action of Auckland International Airport Limited
did not provide similar Returns, as Genesis Energy Limited. This alteration in the correlation
is due to the news of Fire that negatively affected its share price movement.

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Answer to question 3.c)
Figure 6: ^AXJO Index and GNE
(Source: Au.finance.yahoo.com 2019)
There is no similarity or correlation between the share price movement of Genesis
Energy Limited and the Australian index. The price action of both the index and the
organization is contradictory to each other, as when the prices of Genesis Energy Limited
Rose the Australian index value declined. This directly indicates that the price movement of
Genesis Energy Limited is not connected to the Australian index.
Figure 7: ^AXJO Index and AIA
(Source: Au.finance.yahoo.com 2019)

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In the similar instance, the price action of Auckland International Airport Limited also
does not correlate with the Australian index, as seen in the above figure. This contradictory
valuation of the index and the organization is a proof that the Australian market does not
influence its price movement.
Answer to question 4.a)
Figure 8: USD vs AUD
(Source: Oanda.com 2019)
Commonwealth Bank of Australia has operations in the international market, which is
valued at USD. Therefore, the alternation in the currency values of USD/AUD will have
impact on its share price. However, the operations are mainly a small portion of the actual
activities that is conducted in Australia. This is the main reason why the fluctuations in
USD/AUD are not affecting the share price of Commonwealth Bank of Australia.
Answer to question 4.b)
In the similar instance, the share price of Wesfarmers Limited is not influenced by the
USD/AUD currency conversion rate. The proof can be seen in the above figure, as declining
values of the currency is not affecting the actual share price valuation.

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Answer to question 5.a)
Figure 9: New Zealand dollar vs AUD
(Source: Oanda.com 2019)
The price actions of Genesis Energy Limited is directly supported by the New
Zealand dollar, as it operations are conducted in New Zealand. Therefore, any fluctuations in
the valuation of New Zealand dollar with Australian Dollar will directly have an impact on its
share price that is listed in the Australian index.
Answer to question 5.b)
In the similar instance, the share price of Auckland International Airport Limited is
also influenced by the New Zealand dollar, as it is the major currency in which the operations
are conducted. Therefore, it could be understood that the share price valuation is affected by
the fluctuations in the conversion rate of New Zealand Dollar to Australian dollar.

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References:
Au.finance.yahoo.com. 2019. Yahoo is now a part of Oath. [online] Available at:
https://au.finance.yahoo.com/world-indices [Accessed 15 Jan. 2019].
Oanda.com. 2019. Historical Currency Converter | OANDA. [online] Available at:
https://www.oanda.com/fx-for-business/historical-rates?
view=graph&base=USD&quote=EUR&duration=30 [Accessed 15 Jan. 2019].

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Appendices:
Week 1
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.300 3.483% Bank i
Wesfarmers Limited 31.890 0.918% Positiv
Genesis Energy Limited 2.320 -2.521% Presen
Auckland International Airport Limited 6.650 -1.917% Boad m
Portfolio Average -0.009%
Week 2
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.230 -0.098% Embar
Wesfarmers Limited 31.590 -0.941% Marke
Genesis Energy Limited 2.360 1.724% Ongoin
Auckland International Airport Limited 6.680 0.451% Improv
Portfolio Average 0.284%
Week 3
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 70.370 -1.207% Marke
Wesfarmers Limited 31.950 1.140% Positiv
Genesis Energy Limited 2.400 1.695% Notice
Auckland International Airport Limited 6.890 3.144% Adopti
Portfolio Average 1.193%
Week 4
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 68.810 -2.217% Marke
Wesfarmers Limited 31.280 -2.097% Marke
Genesis Energy Limited 2.450 2.083% Notice
Auckland International Airport Limited 6.660 -3.338% occura