Describe and explain the hedging strategy that the company should take in the below cases. An answer

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Describe and explain the hedging strategy that the company should take in the below cases. An answer can be is that the company should not be hedging at all.

a)A US restaurant would like to hedge fluctuations in the prices of key inputs because of the uncertainty regarding COVID-19.

b)A company needs to make a one-time payment of 50 million dollars in Mexican Pesos in about 6 months, and would like to hedge against the risk that exchange rates may change.

c)A US manufacturing firm that produces in the US and sells cars in Europe would like to reduce the effect of currency fluctuations on its profits.

d)A CFO believes that the price of oil (one of the company's main inputs) is going to increase, and wants to generate profits from this increase.

Posted Date: May 18, 2024 03:08 PM

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Describe and explain the hedging strategy that the company should take in the below cases. An answer

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