1. Should multinational firms hedge foreign exchange rate risk? If not, what are the consequences? If so, how should they decide which exposures to hedge?

a. What is hedging? Why do companies hedge?

b. What are reasons for hedging against currency fluctuations?

c. What are types of exposures faced by multinational firms?

1. If multinational firms hedge foreign exchange rate risk, what decisions have to be made to implement a hedging policy?

i. What should be hedged?

ii. How much should be hedged?

iii. How should one hedge? (What instruments should be used for hedging?)

iv. Where should hedging decisions be made?

v. When to deviate?