Air New Zealands foreign currency hedging program contributed to the firms overall profits. Air New Zealand pays

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Air New Zealand’s foreign currency hedging program contributed to the firm’s overall profits. Air New Zealand pays large operating expenses in U.S. dollars, mostly to pay operating costs on flights to and from the United States. Suppose that the New Zealand dollar rises in value against the U.S. dollar and that Air New Zealand does nothing to hedge its U.S. currency exposure. What impact would a rise in the New Zealand currency have on the airline’s profits?

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Principles Of Managerial Finance

ISBN: 9781292018201

14th Global Edition

Authors: Lawrence J. Gitman, Chad J. Zutter

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