Accounting Project

"Palmetto Bug Extermination Corporation (PBEC), a U.S. company, regularly purchases chemicals from a supplier in Switzerland with the invoice price denominated in Swiss francs. PBEC has experienced several foreign exchange losses in the past year due to increases in the U.S. dollar price of the Swiss currency. As a result, Dewey Nukem, PBEC's CEO, has asked you to investigate the possibility of using derivative financial instruments, specifically foreign currency forward contracts and foreign currency options to hedge the company's exposure to foreign exchange risk.

Required

Draft a memo in word format to CEO Nukem comparing the advantages and disadvantages of using forward contracts and options to hedge foreign exchange risk. Recommend the type of hedging instrument you believe the company should employ and justify this recommendation. Your memorandum should follow the rules of grammar and should not be more than three pages. Points will be deducted for misspelled words and grammatically incorrect sentences. The total value of this assignment is 115 points. This assignment is due in word format in the dropbox by 11:59 PM on Sunday, December 10, 2017. This is an individual assignment and should not be done in corroboration with other students."

I would like to inquire about the main topics I should discuss about, and also the subtopics that I need to address.