Minicase: Airbus’ Dollar Exposure

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Case Study: “Mini Case Airbus Dollar Exposure” Table of Contents INTRODUCTION......................................................................................................3 CASE STUDY ..........................................................................................................5 1) Forward Contracts………………................................................. 5 2) Economic Hedge .......……………................................................6 3) Future Spot Exchange Rate .......................................................... 7 4) Option and Money Market Hedge ............................................... 8 5) Advantages and disadvantages of hedging ….............................. 8 CONCLUSION ........................................................................................................ 12 REFERENCES ......................................................................................................... 13 Introduction During the course, we have been facing different situations where the foreign exchange market and their financial tools are the object of our analysis. Foreign Markets are very volatile and highly dependent of the income and currency of a country; therefore International and Transnational Companies face too many risks when doing business. This happens because all the different currencies that are involved in transactions; it is very important that companies are aware of their foreign currency exposure and know how to manage it. Investors and multinational corporations must manage economical risks and foreign exchange risk, including transaction exposure, economic exposure, and translation exposure. In this case we will analyze the following points in examples, therefore here we will see a brief exposure of each element: Forward Contracts- non-standardized contract between two parties to

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