Exposure EASY (definitional) 10.1 ___________ a certain currency exposure means establishing an offsetting currency position so that the gain or loss from the exposure on the original currency is exactly offset buy the gain or loss from the currency hedge. a) Arbitraging b) Cross-hedging c) Hedging d) Risk shifting Ans: c Section: Alternative measures of foreign exchange exposure Level: Easy 10.2 Hedging cannot provide protection against ________ exchange rate changes. a) expected b) nominal
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be managed: - Natural Hedges - Cash Management - Adjusting of Intracompany accounts - International financing hedges and currency hedges through forward contracts‚ futures contracts‚ currency options and currency swaps NATURAL HEDGE - A hedge (risk reduction action) that occurs naturally as a result of a firm’s normal operations. For example‚ revenue received in a foreign currency and used to pay commitments in the same foreign currency would constitute a natural hedge. FOUR POSSIBLE SCENARIOS
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Tutorial 7: Management of Economic Exposure QUESTIONS 1. How would you define economic exposure to exchange risk? Answer: Economic exposure can be defined as the possibility that the firm’s cash flows and thus its market value may be affected by the unexpected exchange rate changes. 2. Explain the following statement: “Exposure is the regression coefficient.” Answer: Exposure to currency risk can be appropriately measured by the sensitivity of the firm’s future cash flows and the
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RESTAURANT BRANDS NEW ZEALAND LIMITED 2012 ANNUAL REPORT TO VIEW PLEASE USE 3D GLASSES PROVIDED Contents Editorial Year in review Financial highlights Chairman’s report Chief Executive’s report The illusion of simplicity Carl’s Jr KFC operations Pizza Hut operations Starbucks Coffee operations Board of Directors Consolidated income statement 02 03 05 07 12 14 16 18 20 22 24 Statutory reports Financial statements Auditors’ report Shareholder information Statutory information Statement of corporate
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December. State the contract that should be used for hedging when the expiration of the hedge is in a) June b) July c) January A good rule of thumb is to choose a futures contract that has a delivery month as close as possible to‚ but later than‚ the month containing the expiration of the hedge. The contracts that should be used are therefore a) July b) September c) March Problem 3.9. Does a perfect hedge always succeed in locking in the current spot price of an asset for a future transaction
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Summary of IAS 39: IAS 39: Financial Instruments: Recognition and Measure was first adopted by European Union for annual periods beginning on or after January 1st 2005. The goal was to provide principles for recognising and measuring financial assets‚ financial liabilities (including derivative financial instruments) and some specific contracts to buy and sell non-financial items. Initial Recognition: Financial asset or financial liability is only recognised on balance sheet when and only when
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love‚ relationship‚ wisdom or happiness could all be just an illusion. The way that people perceive things can be heavily influenced by many outside factors such as the media‚ entertainment‚ literature‚ and so on. In Empire of Illusion‚ the author Hedges uncovers the truth of how humans’ points of views about media‚ entertainment‚ love‚ relationship‚ and wisdom has been influence by the surrounding environment. He has shown the values of those aspects are being change by peoples’ point of view. Media
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Hedging in the Mining Industry Strategy‚ Control and Governance Contents Foreword Chapter 1: Executive summary Chapter 2: To hedge or not to hedge? Considering a strategy 1 2–4 5 – 12 Chapter 3: What tools are available? Implementing the hedging strategy 13 – 24 Chapter 4: How do we control and monitor a hedging programme? 25 – 36 Chapter 5: How‚ why and to whom do we communicate our risk-management strategy? 37 – 44 Chapter 6: What are the accounting implications? 45 – 49 Appendix
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HOW MUCH SHOULD WE USE DERIVATIVES HEDGES? A Study in Airline Industry Changgull Song Fordham University‚ Deming Scholars MBA‚ changgull@gmail.com For managers of airlines‚ it is not always easy to predict the jet fuel costs‚ which affect the profitability of the firm. As a solution‚ some airlines aggressively hedge against the variability‚ but some others don’t. Here‚ we are trying to find an answer to a question‚ “How much should they hedge?” Variability in Earnings: Is it Bad? In a
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How would hedge fund front and middle office processes get impacted by mobile computing? In this era of technology and innovation‚ mobile computing has brought about a paradigm shift in the way firms deal with clients and the process they follow. Adoption of these technologies will also help hedge funds to improve their efficiency. Firstly one need to understand the function of front and middle office. Front office is the most important part of hedge fund as this division
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