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FIN 6860 Should multinational firms hedge foreign exchange rate risk? If not, what are the consequences? If so, how should they decide which exposures to

FIN 6860

  • Should multinational firms hedge foreign exchange rate risk? If not, what are the consequences? If so, how should they decide which exposures to hedge?
  • What do you think of GMs foreign exchange policies? How would you advise them about possible changes to their policies?
  • What would happen to GMs income statement if the Canadian dollar moved strongly, in either direction?
  • Should GM deviate and change its hedging decision on the Canadian dollar?
  • If GM does deviate from its formal policy for its CAD exposure, how should GM think about whether to use forwards or options for the deviation from the policy?
  • Should GM increase its hedge with respect to the ARS? How costly would it be and would it be worth it?
  • What operational decisions could GM make to manage this exposure?

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