Panagouda Plc considers importing supplies from Ghana. Ghana’s currency (the Ghanaian cedi) is not liquid and relevant contracts are very expensive.

You are asked to:

1. consult the management regarding hedging techniques they can use in cases where the currency is not liquid.

2. Please refer to empirical evidence about the efficiency of each technique.

3. How would your answer change if the currency was liquid? What are the alternative hedging techniques for the company and how could it hedge? Explain each hedging technique and discuss when it is better to use each.

4. Compare your answers in parts 1 and 3.