1. What would be the rationale for Rede Globo to consider dollar financing? What are the risks involved? On an early Monday morning, Dr. Guadalupe Philips was reviewing pro forma cash-flow statements in preparation for an upcoming staff meeting of the treasury department. Guadalupe would first consider various proposals before deciding on how to fund the firm’s working capital.

Dr. Philips was the newly appointed treasurer of Rede Globo Ltd., the Brazilian media conglomerate headquartered in Rio de Janeiro. Rede Globo was a producer of TV programs (mostly telenovelas) and operated several cable television channels, primarily in Portuguese and catering almost exclusively to the Brazilian market.