Refer to this Case: OSG Corp: Hedging Transaction Exposures https://www.coursehero.com/file/74792857/casitopdf/

1. Assume that 056 currently has accounts receivable of US $1 million from a US company which will be paid in three months. Explain and calculate how one might hedge the company's FX risk. Use the information on Appendix 1. 3. Forward hedge in. Money market hedge {borrow USS, exchange to JPY at spot rate, then use receivable to repay the USS debt) c. Option hedge Run a comparison to what would happen if company did not hedge and JPY appreciated at the end ofthree months to JPY/USD 105? What if yen depreciated to JPY/USD = 125? 2. In addition to #1 a b and c, explain non-hedging techniques for 056 to minimize transaction exposure 3. Describe FX risk of 056 Corporation based on page 6 of the case, Exhibits 5, B and 9. Assess potential for loss or gain. 4. Should OSG hedge its transaction exposure? Why or why not? If company were to hedge, which method should be used? How would you determine the amount to be hedged? [hint looking at question 6 would help. 5. Explain and assess 056's current policy. In the face of the appreciating yen, would you recommend any changes to policy? Why or why not