Fuel Hedging A Strategy for Air Carriers to Combat Fuel Hike Index Jet Fuel – The Nemesis of Airlines In the year 2008‚ the growth of global aviation industry received a major bolt from the fear of global economic slowdown and the rise in crude oil prices. Though the global economic uncertainties impacted the business of airlines‚ but the steep surge in crude prices has changed the financial equations of the airline across the world‚ with India being no exception. In fact over the previous
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Crafting and Executing Strategy Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy The airline industry is facing one of its most difficult times in history. A worldwide recession along with the terrorist attacks of September 11‚ 2001 have led to a decrease in passenger traffic‚ reduction in revenue and rising fuel prices. Additionally‚ airline companies face the increase competition from new entrants. The shortage of pilots has also caused
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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In the economic field of agency theory‚ which one of the following is viewed as an agent with the principals who are most importantly the firm’s shareholders? A) managers B) employees C) attorneys D) suppliers 2) The cash manager at AmFlex Company needs to buy 1‚000‚000 British pounds to pay a British supplier. A currency broker quotes him a bid-ask
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1997:188). This makes their speech more acceptable to the interlocutor. For example‚ You are mistaken. I think you are mistaken. The second way of saying contains a hedge ‘think’ which helps to soften the force of utterance and makes it less threatening to the hearer. Therefore hedging is closely related to the politeness. When we use hedges to make our
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Deposit rate 8% 5% Borrowing rate 9 6 Given this information‚ determine whether a forward hedge‚ money market hedge‚ or a currency options hedge would be most appropriate. Then compare the most appropriate hedge to an unhedged strategy‚ and decide whether Carbondale should hedge its receivables position. ANSWER: Forward hedge Sell S$500‚000 × $.62 = $310‚000 Money market hedge 1. Borrow S$471‚698 (S$500‚000/1.06 = S$471‚698) 2. Convert S$471‚698 to $283‚019 (at $.60
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1 Hedging Strategies Using Futures Chapter 3 2 Long & Short Hedges • A long futures hedge is appropriate when you know you will purchase an asset in the future and want to lock in the price • A short futures hedge is appropriate when you know you will sell an asset in the future & want to lock in the price • A short hedge is also appropriate if you currently own the asset and want to be protected against price fluctuations 3 Arguments in Favor of Hedging • Companies should
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1. Should multinational firms hedge foreign exchange rate risk? If not‚ what are the consequences? If so‚ how should they decide which exposures to hedge? Generally‚ multinational firms should hedge foreign exchange rate risk. Because foreign exchange risk 1) Affects existing income statement items and balance sheet assets‚ liabilities‚ and equity through translation exposure. 2) Influences the value of outstanding foreign-currency-denominated contracts and obligations‚ thus firm’s earning and
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financial position and measure those instruments at fair value. If certain conditions are met‚ a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment‚ (b) a hedge of the exposure to variable cash flows of a forecasted transaction‚ or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation‚ an unrecognized firm commitment‚ an available-for-sale security‚
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1.What is a hedge fund? How do hedge funds differ from mutual funds? According to our case‚ Hedge funds are private group investments that offer equity pooling advantages. Hedge funds have limited partnership which are restricted by law to no more than 1000 investors per fund‚ so hedge funds set extremely high minimum investment amounts‚ ranging anywhere from $250‚000 to over $1 million. Hedge funds not only require investors pay a management fee‚ but also collect a percentage of the profits
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Accounting For Derivatives Menurut GAAP‚ semua derivatif harus dinilai pada nilai yang wajar dan dicatat sebagai aktiva atau kewajiban dalam neraca. Kecuali untuk derivatif yang ditunjuk sebagai hedges‚ keuntungan dan kerugian terkait dengan perubahan dalam nilai wajar dari derivatif harus dilaporkan sebagai bagian dari pendapatan bersih setiap tahun. Menurut peraturan tersebut‚ investor diberi informasi tentang nilai-nilai derivatif dan keuntungan dan kerugian yang timbul dari perubahan dalam
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