Read the Management Focus article (page 301) in Chapter 10 of the textbook (13th ed.).

1. What does the recent economic history of Brazil tell you about the relationship between price inflation and exchange rates? What other factors might determine exchange rates for the Brazilian real?
2. Is a decline in value of the real against the US dollar good for Embraer, bad for Embraer, or a mixed bag? Explain your reasoning.
3. What kind of exchange rate risks is Embraer exposed to? Can Embraer reduce these risks? How?
4. Do you think Embraers decision to try and hedge against further appreciation of the real in the early 2000s was a good decision? What was the alternative?
5. Between mid-2014 and early 2015 the real depreciated significantly against the US dollar. What do you think the impact was on Embraer? Explain your reasoning.