Foreign Exchange Hedging Strategies At General Mot

Case 1: Foreign Ex throw Hedging St arraygies at superior general Motors: Transactional and Translational Exposures Decision Point: Eric Feldstein, principal sum of General Motors treasury team, has to locate if GMs exposures to the Canadian dollar and Argentine peso spoil risks that annunciate for deviations from the companys standard postpone insurance policy. discipline Points: The ca subroutine explores how a multinational firm manages its contrary tack exposures. The gaucherie provides students with the opportunity to: Examine the reasons for hedge. Identify the contrasting types of exchange rate risks faced by companies with international operations. record the decisions that have to be made to construct a hedging policy. Analyze how changes in exchange rates affect a companys financial statements Compare the use of futures and options in implementing hedges. Assignment Questions: (The questions under are tentative and subject to changes. am use check chalkboard for the complete list of questions) 1. Should multinational firms hedge alien exchange rate risk? If not, what are the consequences? If so, how should they decide which exposures to hedge? 2. What do you hypothesise of GMs foreign exchange hedging policies? How would you advise them about possible changes to their policies? 3.

What would pass on to GMs income statement if the Canadian dollar travel strongly, in either direction? 4. Should GM deviate and change its hedging decision on the Canadian dollar? 5. If GM does deviate from its musket ball policy for its CAD exposure, how should GM think about whether to use forwards or options for the deviation from the policy? 6. Should GM cast up its hedge! with respect to the ARS? How high-priced would it be and would it be expenditure it? 7. What operational decisions could GM murder to manage this exposure? special Materials Recommended Lawson, John, et al., Treasury Profits-German Autos-The Billion clam Hedges (Smith Barney Citigroup, June 2003). Jonas, Adam, et al., Autos...If you want to get a full essay, order it on our website: OrderEssay.net

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