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Design of hedging strategies

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You work for firm XYZ situated in Britain, and your boss has become concerned about the current economic environment, especially as it is related to the different types of exposures that your firm may face in the near future. You are asked to provide a report, which evaluates how your firm is exposed, the risk management implications for your firm, and possible hedging strategies. You are also required to provide a recommendation for what your firm should do.

Information about Firm XYZ:

1. The firm imports high quality wool to Britain from foreign suppliers located in Australia and the New Zealand.

2. The firm exports Jewellery to USA from Britain.

3. The firm exports designer clothes from Britain to Australia, New Zealand and Singapore.

4. The firm has a payment of 8,000,000 AUD due in 3 months to their supplier in Australia, a payment of 6,000,000 NZD due in 2 months to their supplier in New Zealand.

5. The firm is due to receive 9,000,000 AUD from their customer in Australia in 2 months, 4,000,000NZD from their customer in New Zealand in 2 months, 700,000 SGD from their customer in Singapore in 1 months, and 9,000,000 USD from their customer in USA in 2 months

6. The firm is concerned with the impacts of the potential high inflation rate due to the recent expansionary monetary policy globally in their exporting and importing business

PLEASE PROVIDE HEDGING STRATEGIES!

Design of hedging strategies

Design of hedging strategies

Marks will be awarded based on the relevance, the effectiveness and the cost of the proposed hedging strategies Excellent strategies in terms of their relevance, effectiveness and cost

Reference no: EM133070633

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