Please read Management Focus: Volkswagen's Hedging Strategy on page 287 (in the 8th edition) in your textbook. Volkswagen saw a 95% drop in its fourth quarter profits in 2004 after an unexpected surge in the value of the Euro left the company with losses of $1.5 billion. 1. What is hedging? Explain how Volkswagen's failure to fully protect itself against foreign exchange fluctuations had a negative effect on the company? What can Volkswagen and other companies learn from this experience? 2. Why was Volkswagen so vulnerable to the change in the value of the Euro against the US Dollar relative to the US Dollar? 3. Exchange rates affect the revenues of US companies. Please see the examples from different years. Can you search and give current examples? How does the exchange rate affect US businesses? What can these companies do to protect themselves from exchange rate fluctuations? A Strong Dollar May Actually Be Hurting You (2017) http://www.businessinsider.com/strong-us-dollar-may-hurt-american-businesses Colgate-Palmolive Sales Hurt by Strong Dollar (2017) http://www.marketwatch.com/story/colgate-palmolive-sales-hurt-by-strong-dollar-2017-01-27 Whirlpool (2019) https://www.fool.com/investing/2019/04/22/whirlpool-remains-on-track-after-first-quarter.aspx