Question
Describe in words the hedging strategy that the company should take in each of these cases.: 1. A US company expects to make a one-time
Describe in words the hedging strategy that the company should take in each of these cases.:
1. A US company expects to make a one-time payment of 500 million Korean Won in about 6 months and would like to hedge against the risk that exchange rates may change during this period.
2. A CFO from a multinational company believes that oil prices are going to increase. While the company does not have significant operational exposure to oil, the CEO is considering going to the futures markets to take advantage of this opportunity.
3. A CFO from a start up company is concerned that the FED will increase interest rates, affecting the cost of equity for the company in the next year.
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