14 Researching MNCs and exposure. The following website provides annual reports of numerous MNCs:

http://reportgallery.com. You may also access annual reports via the FT website at http://www.ft.

com and international reports via http://www.forbes.

com choosing lists.

a Review an annual report of an MNC of your choice. Look for any comments that relate to the MNC’s economic or translation exposure. Does it appear that the MNC hedges its economic exposure or translation exposure? If so, what methods does it use to hedge its exposure?

b The following website provides exchange rate movements between currencies over time: http://

www.oanda.com.

Based on the translation exposure of the MNC you assessed in exercise (a), determine whether the exchange rate movements of whatever currency (or currencies) it is exposed to moved in a favourable or unfavourable direction over the reporting period.
Further notes: search the annual reports using the keyword ‘risk’. You will find the MNC’s policy on currency risk. Fuller details are given by the major multinationals. These can include: estimates of the sensitivity of profits to a 1% currency change; derivative returns from currency change; the main types of hedging used and principal type of exposure. Do not just report their calculations; make your own estimates from the data provided.