Question
1. Aflacs Income Is Mostly in Yen. Here Is How It Reduces Its Currency Risk. A. Why does Aflac have to convert its Japanese yen
1. Aflacs Income Is Mostly in Yen. Here Is How It Reduces Its Currency Risk. A. Why does Aflac have to convert its Japanese yen revenue into dollars? How is this risk different from translation exposure of its Japanese subsidiary? B. How does the article describe Aflacs operating exposure? What is the financial operating exposure hedge that it uses? Explain. C. Explain two ways in which Aflac uses forward contracts for hedging. 2. Weakening of foreign currencies opens up hedging options. A. What is the risk of long-term hedging discussed in the article? B. Wolfgang Koester, the strategist mentioned in the article recommends hedging only one of the types of foreign exchange exposure. Which is it (transaction, operating, or translation)? How do you know?
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