What is the hedging strategy that the company should take in each of these cases. Sometimes they
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Question:
What is the hedging strategy that the company should take in each of these cases. Sometimes they don't need to hedge
a)A US retailer would like to hedge fluctuations in sales because of general economic uncertainty.
b)A company may need to issue 50 million of debt in 6 months, and would like to hedge against the risk that interest rates go up.
c)A US manufacturing firm that produces cars in Mexico to sell in the US would like to hedge against currency risk.
d)A CFO believes that the price of steel (one of the company's main inputs) is going to decrease, and wants to generate profits from this decrease.
e)A UK manufacturing firm that produces cars in the UK to sell in the Euro area wants to hedge against currency fluctuations.
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