Optimal hedging strategy [enlarge] before we can discuss an optimal hedging strategy, we must discuss what is hedging in the first place basically, hedging is an investment action that is designed to reduce the risk of. Get your hedging currency risks at aifs case solution at thecasesolutionscom thecasesolutionscom is the number 1 destination for getting the case studies analyzed. Hedging exchange risk is a strategy that should be considered during periods of unusual currency volatility because of their investor-friendly features, currency etfs are ideal hedging. Hedging currency risk at aifs essay summary aifs is an american based company that offers travel abroad and exchange study services to both college and high school students while aifs's revenues are denominated in american dollars (usd), most of their costs are in foreign currencies as euros (eur) and british pounds (gbp.
Aifs has a hedging policy but the controller wants to check the amount of exposure that is covered and the use of futures and options aifs sets guaranteed prices for their stock exchanges and tours a year in advance, are known before its final sales figures. Currency risk management acknowledgement through this acknowledgement, i would express my sincere gratitude towards all those people who have helped me in the preparation of this project, which has been a learning experience. Homework: foreign currency transactions and hedging - hedging currency risk at aifs case 1 - hedging currency at aifs introduction what gives rise to the currency exposure at aifs we will write a custom essay sample on hedging currency at aifs or any similar topic specifically for you do not waste your time send by. Hedging currency risks at aif 1085 words | 5 pages 27, 2013 hedging currency risks at aif the american institute of foreign studies (aifs) is a company that organizes student exchange programs worldwide with two main divisions.
Case solution aifs is an american organization that universal trade chances to both school and secondary school understudies while the organization's incomes are produced in american dollars (usd), a huge extent of their expenses are brought about remote coinage, for example, euros (eur) and british pounds (gbp. 27, 2013 hedging currency risks at aif the american institute of foreign studies (aifs) is a company that organizes student exchange programs worldwide with two main divisions the college division arranges academic years and semesters or summer schools. Introduction: hedging, by acharya et al(2009) is described as a manner of reducing and eliminating the level of exposure to risks inherent in commodities, foreign currencies and financial assets it would aim to minimize or dampen the effect of prices and rates volatility on a firm's profit, generated by currency or financial risk. Aifs always have currency risk because all the trips are out of the country for educational and cultural programs throughout the world aifs has a great feature that it publishes its catalog yearly and guarantees that its prices will not change before the next catalog. If aifs were to hedge against currency risk using 100% forward contracts, their position would be fully covered if they can accurately predict the amount and timing of the payments if aifs were to hedge using 100% options, they would be fully covered against currency risk, but would pay an option premium of $1,525,000.
Hedging currency risk at aifs hedging currency risks at aifs aifs is a hedging is cheaper in different cases and how much should they hedge. Aifs uses two different pricing decisions for the college and high school travel divisions both programs take into account their cost base, competitive pricing and the hedging activities the college division worked from july 1 to june 30, or the academic planning year. Hedging currency risks at aifs agenda american institute for foreign studies (aifs) founded in the us in 1964 by sir cyril taylor more than 50,000 students each year for exchange programs worldwide. Hedging currency risk at aifs describe firm/firms: o student exchange organization, american institute for foreign study (aifs) o receives most of its revenues in american $ (usd), but incurred costs in other currencies, primarily euros (eur) and british pounds (gbp) o organized educational and cultural exchange programs throughout the world o. International finance 1 case presentation hedging currency risks at aifs objectives the case provides an introduction to how currency mismatches create exposures.
Hedging currency risks at aifs were also monitored in the light of sales and enrollment projections, market rates, currency policy and timing within the business cycle archer-lock on its monthly report made recommendations for the future hedging. Currency risk, or exchange rate risk, refers to the exposure faced by investors or companies that operate across different countries, in regard to unpredictable gains or losses due to changes in the value of one currency in relation to another currency. Hedging currency risks at aifs problem statement: the problem identified in this case is, to determine that which option is best in different scenarios with respect to the fluctuation in exchange rates.
Prof lin guo fin 417 hbs case: hedging currency risks at aifs due date: april 23, 2013 where to get the case: hedging currency risks at aifs, harvard business school case, #9-205-026, 2007. This case is about hedging currency risks at aifs get your hedging currency risks at aifs case solution at thecasesolutionscom thecasesolutionscom is the number 1 destination for getting the. Could you please read the case :hedging currency risks at aifs, harvard business school case, #9-205-026, 2007 just copy past on google and you find the case. The currency exposure at aifs can be measured by competitive pricing risk, volume risk, and bottom line risk such risks are bound to happen in this organization due to their poor hedging policies therefore, the organization must come with effective hedging policies to withstand the currency exposure and operate a sustainable organization.