Tag: CAD

What do you think of GM’s foreign exchange hedging policies? Would you advise any changes?Why is GM worried about the ARS exposure? What operational decisions could it have made or now make to manage this exposure?

GM Hedging-Case Study

Write down the questions and answer to submit.

1. Should multinational firms hedge foreign exchange rate risk and why? If not, what are the consequences? If so, how should they decide which exposure to hedge?

2. What do you think of GM’s foreign exchange hedging policies? Would you advise any changes?

3. Should GM deviate from its policy in hedging its CAD exposure? Why or why not?

4. Why is GM worried about the ARS exposure? What operational decisions could it have made or now make to manage this exposure?

Identify the key problem, issue or dilemma being faced by the company. Identify the circumstances contributing to the business problem or issue. Introduce key players and roles in the problem.

Lack of diversity and inclusivity in the fashion industry (Case Study: Amazon)

An individually negotiated assignment to include an individual action plan informed by reflection.

complete the case study. have indicated the approx. word count for each section you should write and highlighted them in red. (Attachment: SID Case Study only text.docx) –  write on the document

The summative assessment consists of an individually negotiated assignment (5000 words, whereby have started already) in the form of a case study.

You are expected to carry out a case study of your preferred company (Amazon)

investigating a challenge (Diversity, Inclusivity and Empathy) that the company is facing.

You are required to carry out primary (if possible) and secondary research for the

assignment.

You should choose a company (Amazon) you would like to work for at some point in your career and consider the case study your opportunity to obtain in-depth knowledge of the company.

– Your project will gain good marks for being analytical;

• Any sources referred to must be cited in the text and listed in the Reference List (not included in

the word count), following the Harvard method – see Referencing section below;

• You are required to apply concepts, theories and frameworks discussed in the unit and explained

in the recommended readings to support your analysis and discussion;

• You must demonstrate evidence of your engagement with relevant academic literature and

secondary sources; and

• You are expected to conduct primary research to complete this assignment.

Summative assessment: case study structure and suggested word count

• Title page (not included in the word count): state your Student ID, course, unit, report title, number of words, date submitted, unit leader.

• Keywords (not included in total word count): Outline key search terms related to your case to help the reader identify topic. supply a minimum of 5 and a maximum of 10.

These may include: Subjects, Topic, Market sector, Discipline, Geography, Concepts, Company names, People names, Date / timeframe

• Abstract (150-250 words not included in total word count): This will briefly summarise the topic, scope and business problem in the case. This should contain the keywords you have selected above.

The abstract should differ from your introduction by providing a brief summary of the case.

The beginning of your abstract will represent your case in the search results on the resource.  write your abstract out in full and do not use bullet points

• Introduction

• Business Problem (2,200 words): Use subheadings to break up key sections. Identify the key problem, issue or dilemma being faced by the company. Identify the circumstances contributing to the business problem or issue. Introduce key players and roles in the problem. Set the perspective of the reader and/or roles for addressing the problem or issue

• Business Questions (500 words): Pose the major business questions to the reader, in addition to broader study questions, that promote discussion of the key issues within the case

• Conclusions, recommendations and potential solutions (700 words): Briefly summarise your case study, outline the key findings and recommendations

• Action plan informed by reflection (800 words): Must be included. A template is provided for guidance

• References and further reading (not included in total word count): You must include all relevant references in full, plus any additional texts for further background reading on supplementary material.

• Appendices (not included in total word count): Any charts of facts and figures you wish to include

let me know,if you have any questions or when something is unclear, e.g. action plan informed by reflection – CAD framework.

What have you learned about the different hedging methods? Compare MM hedge and forward hedge. Compare forward hedge and futures hedge. Compare options and futures. Which is easier to use? Which is riskier?

Home work
Basic information for this currency pair USD/CAD

1. Determine the percentage change in the currency’s value over the period studied

2. Assume that on the day of DC1, you had contracted to purchase imports, which would require you to pay 1 million units of the currency on the day of DC2.

a. If you had hedged your position with a forward hedge, how many dollars would you have paid for the goods as of the end of the period?

b. If you had hedged your position with a futures hedge, how many dollars would you have paid for the goods as of the end of the school term?

c. If you had hedged your position with a call option hedge, how many dollars would you have paid for the payables as of the end of the period?

d. Assume that you used a money market hedge at the beginning of the school term by borrowing USD at the LIBOR rate + 2%, converted into the foreign currency and invested at the LIBOR rate for the foreign currency to obtain enough money to pay for the account payable.

How many dollars would you have to pay on the loan at the end of the school term?

e. If you did not hedge, how many dollars would you have paid for the goods as of the end of the school term?

f. Fill out the table below
Strategy used for payables Unit cost Total dollar amount paid before commissions Total cost after considering CME fees

3. This question connects with the forecast obtained in Fxstreet
Assume that the hedging decision depended on the forecast of the currency from FX street. If ALL analysts suggest that foreign currency is going up, then you want to hedge 100% of the payables. If ALL analysts suggest that foreign currency is going down, then you will play it conservatively and only hedge 25% of the exposure. You can choose to hedge a fraction of the amount based on the number (%) of analysts expecting an increase. Select the level and calculate the profit/loss for each hedging technique compared to the unhedged position (no hedge case).

Which alternative was best in this case? Was your forecast useful?
The best alternative is call option hedge OTM

4. Assume that as of the beginning of the school term, you had contracted to sell exports, which would result in your receiving 1 million units of the foreign currency at the end of the school term.

a. If you had hedged your position with a forward hedge, how many dollars would you have received for the goods as of the end of the school term?

b. If you had hedged your position with a futures hedge, how many dollars would you have received for the goods as of the end of the school term?

c. If you had hedged your position with put options, how many dollars would you have received for the goods as of the end of the school term (account for the premium that you paid for the put option)?

d. Assume that you used a money market hedge at the beginning of the school term by borrowing foreign currency at the LIBOR rate + 3%, converted into USD and invested in the business at an annual rate of 8%. How many dollars would you “receive” at the end of the school term?

e. If you did not hedge, how many dollars would you have received for the goods as of the end of the school term?
Final spot Total revenue

f. Fill out the table below
Strategy used for receivables Unit price Total dollar amount received

“5. This question also connects with the FXstreet forecasts and the hedging decision depends on the number of analysts projecting an adverse movement.
Which alternative was best in this case? Was your forecast useful?
The forward hedge provides the highest benefit for the investor.

6. What have you learned about the different hedging methods? Compare MM hedge and forward hedge. Compare forward hedge and futures hedge. Compare options and futures. Which is easier to use? Which is riskier? Which has a higher initial cost?

The two alternatives provides advantages and disadvantages to investor. The use of options provides the alternative to execute or not the derivative according to the conditions of the market until maturity, different to future, which depends on the spread between the future value and current value