Please help with the Case outlined below. Thank you!

Case: Currency hedging strategies at General Motors: transaction and conversion risks

General Motors (GM) is among the world's largest automobile manufacturers. GM manufactured vehicles in over 30 countries, and they were sold in over 200 countries. GM's Treasurer and Vice President of Finance had to balance the hedging policy and economic aspects of GM's exposure to fluctuations in the Canadian dollar.

This case study examines an important role of the General Motors (GM) Treasury department, which is managing currency exposure and financial transaction risk.

Questions:

1. GM follows a passive approach in the management of exchange rate risk in contrast to an alternative active approach. What do you think are the advantages and disadvantages of this approach?

2. How regional notional (net) commercial exposures are determined? Is this a good method for estimating the regional exposures?

3. As of 12/31/00, GM maintained a net payable position of CAD 1,600 million (Exhibit 6). What would be the Impact of an appreciation (depreciation) of the spot market rate CAD/USD on the net payable position of GM expressed in USD. Assume as a reference a spot exchange rate CAD/USD of 1.5621. Note: an appreciation (depreciation) of the CAD/US exchange rate implies a reduction (increase) in the amount of CAD necessary to buy one USD.