Case Preparation AIFS
AFM 322
Case Study Preparation
Hedging Currency Risk at AIFS
The case summary is due on by 11:30am on June 2, 2015. You are encouraged to discuss the case in groups, however, each student must submit their own summary via Learn prior to the due date. Only electronic submissions will be accepted. The submission should not exceed 4 pages,
12 point, Times New Roman font, double spaced, 2.54 cm margins on a letter size page.
1. Case synopsis (35 points)
Summarize the setting of the case and describe the firm or firms which are the topic of the case.
Describe the industry in which the firms operate and what defines their competitive advantage or alternatively defines the manner in which they seek to differentiate themselves from their competitors and attract customers. Also describe the key players within each firm and their objectives and incentives.
2. Analysis of the issues (35 points)
Describe the risks and challenges faced by the firm or key player that frame the future decision which must be made. What is the best possible outcome and nightmare scenario for the firm or the key decision maker within the firm?
3. Comments on solutions or strategies (30 points)
Proved your recommendations for solutions or strategies to mitigate or resolve the issues faced by the firm or the key player. Be sure to provide reasoning and discuss the appropriateness of your recommendations. What are the potential risks or downsides to your recommendations?
Questions
When completing the above sections of the case study preparation ensure that the questions below are addressed:
i.
What gives risk to the currency exposure at AIFS?
ii.
What would happen if Archer-Lock and Tabaczynski did not hedge at all?
iii.
What would happen with a 100% hedge with forwards? A 100% hedge with options?
Use the forecast final sales volume of 25,000 and analyze outcomes relative to the “zero impact” scenario described in the case.
iv.
What happens if sales volumes are lower or higher than expected
Case Study Preparation
Hedging Currency Risk at AIFS
The case summary is due on by 11:30am on June 2, 2015. You are encouraged to discuss the case in groups, however, each student must submit their own summary via Learn prior to the due date. Only electronic submissions will be accepted. The submission should not exceed 4 pages,
12 point, Times New Roman font, double spaced, 2.54 cm margins on a letter size page.
1. Case synopsis (35 points)
Summarize the setting of the case and describe the firm or firms which are the topic of the case.
Describe the industry in which the firms operate and what defines their competitive advantage or alternatively defines the manner in which they seek to differentiate themselves from their competitors and attract customers. Also describe the key players within each firm and their objectives and incentives.
2. Analysis of the issues (35 points)
Describe the risks and challenges faced by the firm or key player that frame the future decision which must be made. What is the best possible outcome and nightmare scenario for the firm or the key decision maker within the firm?
3. Comments on solutions or strategies (30 points)
Proved your recommendations for solutions or strategies to mitigate or resolve the issues faced by the firm or the key player. Be sure to provide reasoning and discuss the appropriateness of your recommendations. What are the potential risks or downsides to your recommendations?
Questions
When completing the above sections of the case study preparation ensure that the questions below are addressed:
i.
What gives risk to the currency exposure at AIFS?
ii.
What would happen if Archer-Lock and Tabaczynski did not hedge at all?
iii.
What would happen with a 100% hedge with forwards? A 100% hedge with options?
Use the forecast final sales volume of 25,000 and analyze outcomes relative to the “zero impact” scenario described in the case.
iv.
What happens if sales volumes are lower or higher than expected