! Case Study 6 Foreign exchange hedging strategies at General Motors: Transactional and translational exposures ! General Motors (GM) was the largest automaker in the world‚ and the unit sales in 2001 was 8.5 million vehicles which occupied 15.1% of the total vehicle market. With the expansion through the world‚ GM faced more risk in the foreign exchange (FX). In other world‚ it would create gains or losses due to the changes in FX rate. According to the exhibit 2 and exhibit 3‚ Latin
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Understanding Risk Management Liberty University Understanding Risk Management Over the years‚ people have started relying on digital data‚ information‚ and technologies which affect every aspects of life like‚ education‚ professions‚ research and development. This has led to an increase level of responsibility to protect information from fraud‚ damage‚ or malicious. Risk management is the process by which you manage uncertainty that may affect outcomes that are important to you. By changing
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Currency Wars When we think of war‚ it is easy to imagine soldiers‚ guns‚ tanks and perhaps a bloody chaotic war zone. Then‚ when we think of trade‚ exchange rates‚ foreign exchange‚ currency and its policies what comes to mind--War? Probably not. We are however‚ “in the midst of an international currency war…this threatens us because it takes away our competitiveness” (Mantega). A currency war can be defined as a “competitive devaluation‚ [a] condition in international affairs where countries
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Definition of Currency Crisis: A situation in which the value of a currency becomes unstable‚ making it difficult for the currency to be used as a reliable medium of exchange. The effect of a currency crisis can be mitigated by sufficient foreign reserves. A currency crisis is a type of financial crisis. When is the Currency Crisis started? The Asian Financial Crisis was beginning in July 1997. The crisis started in Thailand with the financial collapse of the Thai baht caused by the decision
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Supply Chain Risk Management Introduction Supply Chain Risk Management is the concept of trying to foresee disruptions to timely supply of goods or services required by the organisation and creating systems to mitigate these at the lowest possible cost to the organisation and by so doing ensure that there will be continuity in the normal operations of the business. Supply chain risks have the potential to cripple a business’ operations and can have long and short term effects which may be difficult
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when their home currencies appreciate in real terms against foreign currencies and prosper when their home currencies depreciate in real terms. Lets us talk about the impact of exchange rate fluctuations on the exports and imports of a country. Exchange rate is simply the value of one currency in terms of another currency. In the international trade market‚ exchange rate plays a vital role for the demand of a product. Let us see how. Lets us consider a scenario when a home currency say Aussie $
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2010 Project Techniques and Risk Management A practical and effective approach Eng. Hayder Issa Engineering Contracts Management Engineering Arbitration Rule in Solving Disputes Post Graduate Certificate in Project Management - UK Project Techniques and Risk Management A practical and effective approach Managing business risk means managing the protection of your employees‚ customers‚ property‚ information and the environment. Risk management is attempting to identify and
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Definition of ’Eurocurrency Market ’ The money market in which Eurocurrency‚ currency held in banks outside of the country where it is legal tender‚ is borrowed and lent by banks in Europe. The Eurocurrency market is utilized by large firms and extremely wealthy individuals who wish to circumvent regulatory requirements‚ tax laws and interest rate caps that are often present in domestic banking‚ particularly in the United States. Read more: http://www.investopedia.com/terms/e/eurocurrencymarket
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objective of General Motors Risk Management policy? Three primary objectives: 1) Reduce cash flow and earnings volatility – this means management hedges the company’s transaction exposures and deliberately pays no attention to any balance sheet exposures or translation exposures. 2) Minimize the management time and costs dedicated to global FX management – this is as a result of an internal study that determined that the investment of resources in active FX management had not resulted in significant
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Corporate Risk Management BUFN 754 Example Examination Fall 2013 NAME: I pledge on my honor that I have not given or received any unauthorized assistance on this examination Please answer all questions in the space provided. Point weights are as indicated. Formulas are provided in the back of the exam. Good Luck! 1. A firm has assets of $1M invested in 30-year‚ 10% coupon Treasury bonds selling at par and whose duration is 9.94 years. It has liabilities of $900‚000 financed through
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