1. Should Disney hedge its yen royalty cash flow? Why or why not? If so‚ how much should be hedged and over what time period? Yes‚ Walt Disney Company should hedge its royalty cash flow to protect against currency fluctuations. The company has revenues in Yen and does not have expenses in Yen. Thus it would be converting the Yen to Dollar and so is exposed to foreign exchange risk. The value of Yen has declined recently and it is difficult to forecast what the value could be in the future
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CASE STUDY THE WALT DISNEY COMPANY’S YEN FINANCING Alexandra Molnár Laure Vigneron Manuel Aguilee Pimprapai Lertamornkitti Pranav Goyal EXECUTIVE SUMMARY Walt Disney‚ an American leisure and entertainment company‚ receives royalty payment from Tokyo Disneyland every year. The royalties were denominated in yen and were constantly growing and becoming significant for the company (8 billion Yen in 1984‚ with 10-20% projected growth). However‚ the depreciation of the yen against the dollar could
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The Walt Disney Company’s Yen Financing Report Contents Overview 3 History of Disney 3 Analysis on Financial Statement 3 Problems to Solve 4 Variable methods of hedging 5 Inter FX Forward Contracts 5 Goldman’s Proposal 7 Gains for Both Counterparties 10 Conclusion 11 The Walt Disney Company’s Yen Financing Report Overview History of Disney The Walt Disney Company (NYSE: DIS)‚ commonly referred to as Disney‚ is an American multinational diversified mass media company
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Introduction: The Walt Disney Company is the largest media conglomerate in the world and is headquartered in Burbank‚ California‚ USA. It was established by Walt and Roy Disney in 1923. Since its inception‚ Disney has grown vastly so that operational areas now include theme parks‚ motion pictures‚ television dramas and consumer products. In 1955‚ the most charming place in the world was ‘Disneyland’ was open for the public. The idea was to create a magical place for the whole family. Ever
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Case study in Derivatives The Walt Disney Company’s Yen Financing GROUP SIX Liang Zhang Xiao Cao Xiang Wang Le Lu 1 / 10 All rights reserved. www.lelu.tk. Contents & Structure Part I. Overview -----------------------------------------------------------------------------------------3 Part II. The problem facing Disney ----------------------------------------------------------------- 3 Status quo 1 - JPY royalties grows fast -------------------------------------------------- 3 Status
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Suppose a bottle of French wine is priced in France at 1000 Euros. If the e = $1/€‚ the cost to an American is €1000 x ($1 / €) = $1000. Conclusion: __________________ . If the Euro appreciates ($ depreciates)‚ will the French wine be more or less expensive? __________________ Proof: if e = $1.20 / €‚ the cost to an American is €1000 x ($1.20 / € ) = $1200. If the Euro depreciates ($ appreciates)‚ will the French wine be more expensive or less? __________ Proof: if e = $.80 / €‚ the cost
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information of Walt Disney The Walt Disney Company‚ a diversified international company operated entertainment and recreational complexes‚ produced motion picture and television features‚ developed community real estate projects‚ and sold consumer products. The company was founded in 1938 as a successor to the animated motion picture business established by Walt and Roy Disney in 1923. The company operated the Disneyland amusement theme park in Anaheim‚ California‚ and the Walt Disney World destination
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The Yen In only 142 years Japan’s economy changed from an antiquated monetary system to the world’s third most traded currency and forth most used reserve currency after the U.S. dollar‚ the euro‚ and the pound sterling. Truly the Japanese Yen is still an unappreciated economic force waiting for it’s chance to take center stage on the world market. CREATION OF THE YEN The Yen came into existence May 10‚ 1871 after the Meiji government chose to abandon Tokugawa coinage
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The history of the Yen The origin of Japanese currency can be traced to the Wu Zhu bronze coin of China‚ which was introduced under the Han Dynasty around 221 BC. Until the 8th Century the Japanese imported such coins from China. However‚ in 708 the Japanese government began minting their own silver and copper coins called the Wado Kaichin or Wado Kaiho‚ which imitated the Chinese Kai Yuan Tong Bao coin ’s size‚ shape‚ and weight. Approximately 250 years later though‚ the Japanese government
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. What features of the 100 Yen Sushi House service delivery system differentiate it from the competition‚ and what competitive advantages do they offer? The main differentiating factor of 100 Yen Sushi House is its production-line approach to food preparation and service. Even the customers are included in the production line. The rate at which customers enter the restaurant‚ remove dishes from the food train‚ and leave the restaurant determines the flow of the delivery process. This "pull"
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