Real Case

Choose a real company

Propose a short term hedging strategy

Get into teams of 2, 3 or 4 members. All names would need to show up on the paper and should be submitted individually.

Be very specific on the details all steps are required.
Show the following:
1.- Assumptions and weighted outcome with no hedge (this is simply the average result of all 3 scenarios)
2.- Determine the net flow in foreign currency
3.- Determine at least 2 short term strategies to hedge that amount.
4.- Compare the 2 strategies, which one is cheaper?
5.- Of the cheapest strategy, use that effective fx rate to determine the new P&L outcome
6.- Determine the HEDGED weighted outcome (again this is simply the average result of all 3 scenarios)
7.- Compare the hedged weighted outcome vs  the no hedge weighted outcome to determine the cost of the hedge.
8.- Conclusions on the short term strategy.
9.- Long term suggested actions.