MAF760 – International Finance

Draw continuously compounded returns of S(USD/AUD) graphically which can extract information on the distributional characteristics of the returns. What kind of distribution features you find.
b. Using 68–95–99.7 normal rule of thumb, provide evidence that the distribution of S(USD/AUD) is different from the normal.
c. Compare artificially (normally) created returns data with that of the actual returns with a valid graphical presentation. What characteristics of the returns do you look for to gauge differences in the two returns?
d. What is your assessment for the directional move of S(USD/AUD) the next day based on your intuition and then based on a valid statistic.
e. How would you convince your team to advise the client on whether to invest or not to invest in S(USD/AUD) for the next 30 days. Your argument must be based on an acceptable hypothesis testing procedure. Draw continuously compounded returns of S(USD/AUD) graphically which can extract information on the distributional characteristics of the returns. What kind of distribution features you find.
b. Using 68–95–99.7 normal rule of thumb, provide evidence that the distribution of S(USD/AUD) is different from the normal.
c. Compare artificially (normally) created returns data with that of the actual returns with a valid graphical presentation. What characteristics of the returns do you look for to gauge differences in the two returns?
d. What is your assessment for the directional move of S(USD/AUD) the next day based on your intuition and then based on a valid statistic.
e. How would you convince your team to advise the client on whether to invest or not to invest in S(USD/AUD) for the next 30 days. Your argument must be based on an acceptable hypothesis testing procedure.