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Evidence Guide: AHCAGB606 - Manage price risk through trading strategy

Student: __________________________________________________

Signature: _________________________________________________

Tips for gathering evidence to demonstrate your skills

The important thing to remember when gathering evidence is that the more evidence the better - that is, the more evidence you gather to demonstrate your skills, the more confident an assessor can be that you have learned the skills not just at one point in time, but are continuing to apply and develop those skills (as opposed to just learning for the test!). Furthermore, one piece of evidence that you collect will not usualy demonstrate all the required criteria for a unit of competency, whereas multiple overlapping pieces of evidence will usually do the trick!

From the Wiki University

 

AHCAGB606 - Manage price risk through trading strategy

What evidence can you provide to prove your understanding of each of the following citeria?

Conduct market research

  1. Collate and evaluate estimates of supply and demand
  2. Analyse past trends and assess possible future scenarios
  3. Relate own products to market indicators
Collate and evaluate estimates of supply and demand

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Analyse past trends and assess possible future scenarios

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Relate own products to market indicators

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Determine price required

  1. Calculate cost of production and determine break-even price
  2. Calculate overhead costs to be allocated against the enterprise
  3. Determine margins for profit and risk
  4. Set forward price objectives to meet cost of production, contribution to overheads and profit required
  5. Evaluate personal attitude to risk
Calculate cost of production and determine break-even price

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Calculate overhead costs to be allocated against the enterprise

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Determine margins for profit and risk

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Set forward price objectives to meet cost of production, contribution to overheads and profit required

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Evaluate personal attitude to risk

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Develop sales plan

  1. Evaluate cash markets and assess projected price trends
  2. Obtain and assess forward contract information
  3. Obtain and assess futures prices
  4. Evaluate selling options against price objectives and the assessment of price movement risk
  5. Assess taxation and cash flow implications
  6. Develop appropriate mix of sale options in a trading strategy
  7. Develop contingency plans to address possible shifts in price trend
Evaluate cash markets and assess projected price trends

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Obtain and assess forward contract information

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Obtain and assess futures prices

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Evaluate selling options against price objectives and the assessment of price movement risk

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Assess taxation and cash flow implications

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Develop appropriate mix of sale options in a trading strategy

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Develop contingency plans to address possible shifts in price trend

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Implement trading strategy

  1. Seek appropriate expertise as required
  2. Monitor market information and adjust trading strategy according to contingency plans
Seek appropriate expertise as required

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Monitor market information and adjust trading strategy according to contingency plans

Completed
Date:

Teacher:
Evidence:

 

 

 

 

 

 

 

Assessed

Teacher: ___________________________________ Date: _________

Signature: ________________________________________________

Comments:

 

 

 

 

 

 

 

 

Instructions to Assessors

Evidence Guide

Element

Performance criteria

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Conduct market research

1.1 Collate and evaluate estimates of supply and demand

1.2 Analyse past trends and assess possible future scenarios

1.3 Relate own products to market indicators

2. Determine price required

2.1 Calculate cost of production and determine break-even price

2.2 Calculate overhead costs to be allocated against the enterprise

2.3 Determine margins for profit and risk

2.4 Set forward price objectives to meet cost of production, contribution to overheads and profit required

2.5 Evaluate personal attitude to risk

3. Develop sales plan

3.1 Evaluate cash markets and assess projected price trends

3.2 Obtain and assess forward contract information

3.3 Obtain and assess futures prices

3.4 Evaluate selling options against price objectives and the assessment of price movement risk

3.5 Assess taxation and cash flow implications

3.6 Develop appropriate mix of sale options in a trading strategy

3.7 Develop contingency plans to address possible shifts in price trend

4. Implement trading strategy

4.1 Seek appropriate expertise as required

4.2 Monitor market information and adjust trading strategy according to contingency plans

Required Skills and Knowledge

Element

Performance criteria

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Conduct market research

1.1 Collate and evaluate estimates of supply and demand

1.2 Analyse past trends and assess possible future scenarios

1.3 Relate own products to market indicators

2. Determine price required

2.1 Calculate cost of production and determine break-even price

2.2 Calculate overhead costs to be allocated against the enterprise

2.3 Determine margins for profit and risk

2.4 Set forward price objectives to meet cost of production, contribution to overheads and profit required

2.5 Evaluate personal attitude to risk

3. Develop sales plan

3.1 Evaluate cash markets and assess projected price trends

3.2 Obtain and assess forward contract information

3.3 Obtain and assess futures prices

3.4 Evaluate selling options against price objectives and the assessment of price movement risk

3.5 Assess taxation and cash flow implications

3.6 Develop appropriate mix of sale options in a trading strategy

3.7 Develop contingency plans to address possible shifts in price trend

4. Implement trading strategy

4.1 Seek appropriate expertise as required

4.2 Monitor market information and adjust trading strategy according to contingency plans

The candidate must be assessed on their ability to integrate and apply the performance requirements of this unit in a workplace setting. Performance must be demonstrated consistently over time and in a suitable range of contexts.

The candidate must provide evidence that they can:

determine cost of production

allocate overhead costs against enterprises

assess risk to financial returns through market or currency movements

analyse trends and evaluating forecasts

monitor and assess price movements

implement a trading strategy for price risk management.

The candidate must demonstrate knowledge of:

supply, demand and price relationships

price trends and sources of market information/forecasts

cost of production

overhead costs

risk assessment and attitudes to risk

selling options for the relevant commodity

operation of futures markets, forward selling arrangements, put options

foreign exchange rates

contract law

cash flow and taxation planning

contingency planning.

Range Statement