Pixonix
International Finance – EMBA Summer 2012
NUST Business School
Assignment-2
CURRENCY EXPOSURE
Analyze and discuss the attached (or handed in class) case and detail the best course of action. Show your calculations leading to you recommendation(s). Answer the following questions:
1. Why is Cain concerned with the current exchange rate fluctuations? Is her position long or short? 2. If Cain decides to use options, will he use calls or puts? 3. Calculate the impact of the two hedging strategies and the unhedged position under the following three scenarios at the end of January: a. US$ = CAD$ b. US$ = 0.90 CAD$ c. US$ = 1.10 CAD$ 4. Should Cain hedge her position in US dollars? Why or why not? If you think she should hedge, which vehicle should she use? And how?
Due Date:
This assignment is due at the beginning of class on July 3rd, 2012. Late submissions will be assigned a reduced grade according to guidelines in the syllabus.
Format:
Up to 10 (maximum) single spaced pages typed on standard sized paper including graphs, tables, etc. All assignments are expected to be professionally written, researched, organized, sequenced, referenced and compiled and will be graded accordingly.
Team Submission:
Select a group consisting of minimum two and maximum three students, who will work jointly on this and all subsequent assignments. Each group will submit one assignment.
Grading
Assignments will be graded per submission, out of a maximum score of 20, and each group member will be assigned the same
NUST Business School
Assignment-2
CURRENCY EXPOSURE
Analyze and discuss the attached (or handed in class) case and detail the best course of action. Show your calculations leading to you recommendation(s). Answer the following questions:
1. Why is Cain concerned with the current exchange rate fluctuations? Is her position long or short? 2. If Cain decides to use options, will he use calls or puts? 3. Calculate the impact of the two hedging strategies and the unhedged position under the following three scenarios at the end of January: a. US$ = CAD$ b. US$ = 0.90 CAD$ c. US$ = 1.10 CAD$ 4. Should Cain hedge her position in US dollars? Why or why not? If you think she should hedge, which vehicle should she use? And how?
Due Date:
This assignment is due at the beginning of class on July 3rd, 2012. Late submissions will be assigned a reduced grade according to guidelines in the syllabus.
Format:
Up to 10 (maximum) single spaced pages typed on standard sized paper including graphs, tables, etc. All assignments are expected to be professionally written, researched, organized, sequenced, referenced and compiled and will be graded accordingly.
Team Submission:
Select a group consisting of minimum two and maximum three students, who will work jointly on this and all subsequent assignments. Each group will submit one assignment.
Grading
Assignments will be graded per submission, out of a maximum score of 20, and each group member will be assigned the same