What will the outcome be if exposure is not hedged

Assignment Help Macroeconomics

Reference no: EM132914318

You work for firm ABC situated in Australia, 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 ABC:

1. The firm imports medical equipment to Australia from foreign suppliers located in Japan, the United States and the Switzerland.

2. The firm also exports pharmaceuticals from Australia to Singapore.

3. The firm has a payment of 600,000,000 JPY due in 3 months to their supplier in Japan, a payment of 5,000,000 USD due in 3 months to their supplier in US, and a payment of 7,000,000 CHF due in 2-month time to their supplier in Switzerland.

4. The firm is due to receive 9,000,000 SGD from their customer in Singapore in 4 months.

5. The firm also have 10,000,000 CHF deposited in a bank in Zurich and the deposit is due to mature in 2 months. The money was deposited 10 months ago at an interest rate of 1.75% p.a.

You are required to prepare a report, which should contain the following information:

Discussion 1. Use the information above to consider the types of exposure your firm may face.

Discussion 2. Discuss the firm's risk management implications and design hedging strategies for the firm. You also need to evaluate the hedging outcome - what will the outcome be if exposure is hedged and what will the outcome be if exposure is not hedged.

Reference no: EM132914318

Questions Cloud

What is a sabayon : What is a sabayon? How is a sabayon produced?

Why can it be important to engage organizational politics : Why can it be important to engage organizational politics? In your view, in what kinds of specific situations might it be best to avoid organizational politics?

Relationship between servant leadership-growth mindset : Describe the relationship between servant leadership, growth mindset, transformational leadership, curriculum design, and professional development.

Describe the problem and proposed solution : For this discussion complete the following readings. Then, answer the three questions that follow in a separate paragraph for each question.

What will the outcome be if exposure is not hedged : Evaluate the hedging outcome - what will the outcome be if exposure is hedged and what will the outcome be if exposure is not hedged.

Criminal justice agency for dream job : What leadership theory would best benefit your agency? What leadership theory can cause issues with your agency?

Assignment title international business development : The House of Dorchester is a premium chocolatier that produces a range of high-quality British-made chocolates, crafted at the company's factory on the Duchy of

Compare consumer protection law in europe versus usa : Compare consumer protection law in Europe versus USA

What future problems would result from scarce resources : What future problems would result from scarce resources? Do you agree or disagree, and why, with Chelsea Follett about overcoming future resource scarcity?

User Account

All Pages