INTERNATIONAL BUSINESS SCHOOL Case Study HEDGING CURRENCY RISKS at AIFS Risk Management Master’s Degree Students: Bostandzhyan Kristina Inarkaeva Lamara Kirpichnikova Mariya Starovoytov Stanislav Sysoev Alexander Supervisor: Yulia Finogeeva Moscow 2015 INTRODUCTION AND PROBLEM STATEMENT AIFS is an American based company which was found in the U.S. in 1964. There are two main divisions in the company: the College division‚ which offers study abroad programs for American college
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rP os t Indian School of Business ISB009 February 15‚ 2013 Rajesh Chakrabarti op yo Hedging Currency Risk at TT Textiles It was a hot March morning in Kolkata in the year 2009. Sanjay K. Jain‚ —Joint Managing Director of TT Textiles‚ watched the sunlight stream in through his office windowpane. But his mind was elsewhere‚ tracking the movements of the Swiss franc (CHF) in the last few months and the world events that had caused them. The Swiss franc had touched 1.17 CHF/US$ from the previous
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MASTER’S THESIS Financial theory offers several rationales for financial risk management. Hedging enables firms to maintain their access to internal funds as well as reduces the costs of financial distress. The theoretical framework offers‚ however‚ few tools for currency risk identification and for choosing a proper hedging instrument. This Thesis seeks to help firms manage risks better by defining the currency risk exposures of a multinational corporation‚ by describing their effects on the cash flows
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Exchange Rate Mechanisms Paper - Currency Hedging University of Phoenix Global Business Strategies MGT 448 Oct 05‚ 2005 Exchange Rate Mechanisms Paper - Currency Hedging Currency hedging involves deliberately taking on a new risk that offsets an existing one‚ thereby reducing a businesses ’ exposure to negative change in exchange rates‚ interest rates‚ or commodity pricing (Economists.com‚ n.d.). "Currency hedging allows a business owner to greatly reduce or eliminate the uncertainties
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and payments in local currencies for Japan‚ the UK and Germany. The current risk management program hurts the company because it doesnot consider Aspen’s expenses abroad that balance sales exposures to currency fluctuations. We then recommend that Aspen hedge completely its exposure but after “natural hedging”‚ which we recommend increasing thanks to the larger financial capacities allowed by its IPO. Using options for aggregated positions (by estimating yearly sales per currency)‚rather than having
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the currency exposure at AIFS? 2. What would happen if Archer-Lock and Tabaczynski did not hedge at all? 3. 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 the possible outcomes relative to the ‘zero impact’ scenario described in the case. complete the spreadsheet.. 4. What happens if sales volumes are lower or higher than expected as outlined at the end of the case? 5. What hedging decision
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Introduction Overview of the hedging techniques In the financial market‚ almost all of companies need to face the currency risk. In order to manage the currency risk‚ companies will use different hedging techniques‚ such as financial and operational hedging techniques. For example‚ money market‚ futures contracts‚ options and forwards contracts are commonly used by firms‚ as well as operational hedging techniques. All of 4 types of financial hedging techniques are short-term hedge. Money market
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AP US History Hard Currency: Sound Money or a Cross of Gold? 1) Since the amounts are fixed‚ deflation will cause the amount to be lower each month for him. If the rates were not fixed‚ he’d be angry but having fixed rates keeps his cost low and the lender loses out. 2) Even though farmers can buy goods cheaper‚ they have to sell theirs cheaper. Also the money it takes to ship will still be present. Buyers are needed as well and they don’t want to pay much if they don’t have much money either
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stemming from this product in 1995. The company gives great significance to R&D as the customers commitment depends on the development of Aspen’s current products. In 1995‚ 11.4 million dollars was dedicated to R&D. There is a factor of foreign currency expense as 20% of the total R&D expense was denominated in British pounds; the rest was in U.S dollars. Aspen enjoys a collection of committed and loyal customers; we can come to this from the increase of the licensing fees between the periods of
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Assurance of Learning Exercise 4A Adidas’ Income Statement for 2009 Currency in Millions of Euros | : | | Dec 31 2009 EUR | | | | Revenues | | 10‚381.0 | | | | TOTAL REVENUES | | 10‚381.0 | | | | Cost of Goods Sold | | 5‚669.0 | | | | GROSS PROFIT | | 4‚712.0 | | | | Selling General & Admin Expenses‚ Total | | 1‚376.0 | | | | Other Operating Expenses | | 2‚796.0 | | | | OTHER OPERATING EXPENSES‚ TOTAL | | 4‚172.0 | | | | OPERATING INCOME |
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