Request PDF on ResearchGate | Hedging Currency Risks at AIFS | SUBJECT AREAS: Currency, Foreign exchange, Foreign exchange rates. There are several factors that give rise to currency exposure at AIFS. One of these is the fact that most of their revenues are denominated in. In order to limit or eliminate this risk, AIFS has to hedge their currency exposure. At the moment the company hedges % of their exposure using forward.

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Sorry, but copying text is forbidden on this website. How should NG go about convincing its customers? The remainder of your paper should support your conclusion and recommendations.

We’ll occasionally send you account related and promo emails. Options ris,s would give the company more flexibility, which is a major issue since not only the exchange rates fluctuate but also the volume of participants. Finance Globalization Health Care.

Osmundsen had relentlessly pushed an agenda that involved transforming and professionalizing the waste management industry to mitigate instances of corruption and other crimes. Leave your email and we will send you an example after 24 hours That means AIFS would have to pay the option premium in any case but this strategy allows to profit from unlimited favourable movements while limiting losses by the premium.

Having brought employees on board, he was planning to relentlessly engage customers, regulators, and security agencies. AIFS sets guaranteed prices for its exchanges and tours a year in advance, before its final sales figures are known.

Hedging Currency Risks At Aifs Essay Example | Studymoose

Only hard copies of the case analysis are accepted. What could NG learn from companies in other industries that have relied on customer support to shift to responsible business practices? Not hedging at all could have disastrous consequences aisf the whole company because in the case of a weak dollar the costs could rise drastically while the revenues remain fixed.


The impact on the cost if nothing is hedged arises merely from the difference in the spot rate and is much stronger than in the hedged case.

A more flexible but meanwhile more expensive strategy to hedge is only using currency options. To what degree should NG drive change on its own in order to achieve customer differentiation vs.

And if the spot rate at expiry is less than the strike price, AIFS can forget about the option and buy for the lower spot rate.

Sorry, but copying text is riaks on this website! Click to learn more https: If actual dollar costs were lower than expected, the impact would be positive.

Hedging Currency Risks at AIFS Essay

Sorry, but copying text is forbidden on this website. Serafeim, George, and Shannon Gombos. Since the company is highly affected by news of war, terrorism and political instability, events which are impossible to predict, I would suggest to alter their hedging policy and use mainly options for hedging.

This support should be based on your definition of the problem and inferences that you draw from the facts of the case. Hi, I am Sara from Studymoose Hi there, would you like to rieks such a paper?

Hedging Currency Risks at AIFS by Zachary Connolly on Prezi

Instead of derivatives, an alternative possibility for AIFS to hedge their currency exposure would be to set up accounts abroad in foreign currency up to a certain amount. About the Author Mihir A. In total the costs still sink by 3, because the effect of the lower spot rate currenct the premium.


To obtain executable spreadsheets coursewareplease contact our customer service department at custserv hbsp. What other mechanisms existed to level the playing field if NG did not succeed in convincing the customers? Cite View Details Educators Purchase.

You should download the excel spreadsheet for the case at the Blackboard, complete the quantitative analysis using the spreadsheet, and attach the spreadsheet to your case write-up to support your arguments. If you need this or any other sample, we can send it to you via email. The possible outcomes in the two described strategies and a scenario with no hedge at all are summarized in the table below. Sorry, but downloading is cirrency on this website.

The biggest stake of the costs are in euro and pound sterling, hence these two currencies are of major concern. Thus costs would increase by The higher the costs turn out, the higher this negative effect would be in nominal amount. Your Answer is very helpful for Us Thank you a lot! This would simplify the hedging approach and it would be reasonable the business model of AIFS forces them to keep foreign exchange every year. The controllers need to ensure that the company adequately hedges its foreign exchange exposure and achieves an appropriate balance between forward contracts and currency options.

Their customers have the possibility to go abroad while hfdging AIFS organises the whole trip for them. How about make it original?