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- Giving Voice To Values
- Decision Analysis
- Case Method
- Economics
- Business
- Business-Government Relations
- Diversity Management and Leveraging Difference
- Entrepreneurship and Innovation
- Environment and Sustainability
- Ethics
- Finance
- Accounting & Control
- Global Economies and Markets
- Leadership and Organizational Behavior
- Management Communications
- Management Science
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- Negotiations
- Nonprofit Organizations
- Operations Management
- Pedagogy and Higher Administration
- Personal Assessment and Career Strategy
- Quantitative Analysis
- Strategy
- Technology and Innovation Management
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- Giving Voice To Values
- Decision Analysis
- Case Method
- Economics
- Business
- Business-Government Relations
- Diversity Management and Leveraging Difference
- Entrepreneurship and Innovation
- Environment and Sustainability
- Ethics
- Finance
- Accounting & Control
- Global Economies and Markets
- Leadership and Organizational Behavior
- Management Communications
- Management Science
- Marketing
- Negotiations
- Nonprofit Organizations
- Operations Management
- Pedagogy and Higher Administration
- Personal Assessment and Career Strategy
- Quantitative Analysis
- Strategy
- Technology and Innovation Management
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Overview
A small adhesives company faces exchange rate risks as it makes its first foray into international sales. The receipt of payment from an unhedged foreign-currency-denominated past sale illustrates potential currency risks while a potential follow-on order provides a context to discuss potential hedges. Sufficient detailed information is provided for the students to construct and analyze both a forward and money market hedge. A teaching note and instructor and student Excel spreadsheets are available.
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Learning Objectives
Learning Objectives
The case can be used in a core finance class or dedicated international finance class to espose students to exchange risks and hedging. It is designed to achieve the following learning objectives: explore the magnitude and effect of exchange rate risks; to illustrate exchange rate risk management through two conventional hedges, a forward contract hedge and a money market hedge; to demonstrate market parity and identify how preferences arise from unique company characteristics; and to explore issues related to pricing of international bids.