Question: Task 1: CLOSING CASE (Chapter 10): Apples Earnings Hit by Strong Dollar Summary The closing case explores the implications of changing currency values on the

Task 1: CLOSING CASE (Chapter 10): Apples Earnings Hit by Strong Dollar

Summary

The closing case explores the implications of changing currency values on the profits of computer giant, Apple. Apple reported a 2016 fourth quarter loss of $5 billion in revenue due to exchange rate changes. The impact on the company was significant, bringing its revenues from an 8 percent increase to just 2 percent. Apple engages in hedging to protect itself from foreign exchange fluctuations, but noted that the rise of the dollar came more quickly than had been forecasted leaving the company exposed.

QUESTION 6: Some companies do not hedge their foreign exchange exposure. Do you think Apple is correct to hedge? Why?

QUESTION 7: How would a fall in the value of the US dollar against other major currencies impact Apple?

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