Question
. Describe GM's hedging policy with regard to transactional and translational exposures. Your answer should include what GM hedges, how much is hedged, what hedging
. Describe GM's hedging policy with regard to transactional and translational exposures. Your answer should include what GM hedges, how much is hedged, what hedging instrument/s is/are used, where the hedges are done, and when does GM deviate from its hedging policy. 2. What types of CAD exposures does GM have? Explain why fluctuations in the CAD/USD exchange rate affect GM's (parent company) income statement. 3. Given the current spot rate is 1.5780 CAD/USD, show the impact on GM's EPS (earnings per share) when the CAD becomes (a) stronger at 1.5291 CAD/USD, and (b) weaker at 1.6269 CAD/USD, when only translational exposures are considered. 4. Using the same set of exchange rate scenarios in Question 3, show the impact on GM's EPS with a (a) 50% hedge policy, and (b) 75% hedge policy, when only transactional exposures are considered. (Hint: excess cash reduces the required hedge amount).
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