Hedging Currency Risks at AIFS Case Solution
The American Institute for Foreign Studies (AIFS) organizes study abroad programs and cultural exchanges for American students. The firm's earnings are mainly in U.S. dollars, but most of its costs are in eurodollars and British pounds. The accountants of the business review the hedging activities of AIFS. AIFS has a hedging policy, but the controllers want to review the percentage of the usage of forward contracts and options and exposure that's covered. AIFS sets guaranteed costs for its exchanges and tours per year in advance, before its closing sales amounts are known. The accountants must ensure the company reaches an appropriate balance between forward contracts and currency options and adequately hedges its foreign exchange exposure. To obtain executable spreadsheets (courseware), please contact our customer service department at custserv@hbsp.harvard.edu.
This is just an excerpt. This case is about FINANCE & ACCOUNTING
PUBLICATION DATE: September 08, 2004
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