Ontario Teacher’s Pension Plan Board: Hedging Foreign Currency Exposure Ontario Teacher’s Pension Plan Board: Hedging Foreign Currency Exposure Issue Identification The Ontario Teacher’s Pension Plan (OTPP) is a defined contribution plan that was created in 1917 to provide and administer a pension plan for Ontario school teachers. Sponsored by the Ontario Government and the Ontario Teacher’s Federation‚ the plan currently supports 343‚000 teachers‚ former teachers and pensioners. The recent
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urrency Currency Hedging Melanie John MGT/448 8/30/12 Mike Zervos Currency Hedging Imagine buying products from another foreign market and having to first buy their currency in the amount needed to make the purchase. Considering currency fluctuates up and down just as stocks do at a stock market‚ investors are now taking advantage of currency hedging to lock in a set currency exchange rate. This paper will discuss what currency hedging is‚ when to use currency hedging and why it may benefit
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What is hedging? Hedging is a strategy used to protect risks posed by worldwide currency fluctuations. One hedges the currency risk by contracting to sell foreign currency in the future‚ at the current exchange rate (Fries). If fund managers think the dollar is going to be stronger when they are ready to change the foreign currency back into American dollars‚ then they take out a foreign futures contract (a hedge). Thus‚ they lock in the exchange rate beforehand‚ so that they will not lose profits
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Homework: Foreign Currency Transactions and Hedging - Hedging Currency Risk at AIFS Case 1. What gives rise to the currency exposure at AIFS. Currency exposure or currency risk is the type of risk that an individual or a company faces due to the fluctuation in price of one currency against another. For AIFS –a student exchange organization that offers education and travel programs all over the world- the fact that they do business domestically and internationally gives rise to several factors that
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Q1. What gives rise to the currency exposure at AIFS? * Currency exposure is the extent to which the future cash flows of an enterprise‚ arising from domestic and foreign currency denominated transactions involving assets and liabilities‚ and generating revenues and expenses‚ are susceptible to variations in foreign currency exchange rates. * AIFS organizes educational and cultural exchange programs throughout the world. AIFS receives most of its currencies in American dollars (USD but
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INTERNATIONAL INVESTMENT AND PORTFOLIO MANAGEMENT BMW: Currency Hedging 2007 BY AJAY BANSAL‚ VAIBHAV SINGH‚ VIJAY VERMA‚ TANMAY JAIN‚ LU YOU‚ SEBASTIAN DOMINITZKI Background 2 Revenue Growth in 2007: 14‚3% €56‚018 Million 1‚500‚678 BMW‚ MINI and Rolls-Royce brand cars were sold during 2007 (9.2% increased) >25% of sales take place in US Crisis in US Credit Market adverse impact on the share prices of European exporting companies BMW common stock: 2.7% drop US dollar dropped
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Dollars (USD)‚ most of their costs are in foreign currencies as Euros (EUR) and British Pounds (GBP). Consequently‚ foreign exchange hedging has a crucial importance for the company because it provides protection against different types of risk that derive from its activity. In order to reduce risk‚ the company is using two hedging derivatives: forward contracts and put options to sell dollars. The aim of the paper is to determine an appropriate hedging policy which answers two main questions: how
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PLEKHANOV RUSSIAN ECONOMIC UNIVERSITY INTERNATIONAL FINANCIAL MANAGEMENT Case Study REPORT Hedging Currency Risks At AIFS Professor: Yulia Y.Finogenova Performed by: Budeanu Diana Gabaydullin Ilnar Kulikova Ekaterina
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AFM 322 Hedging Currency Risk at AIFS 1. Case Synopsis Christopher Archer-Lock and Becky Tabaczynski both work for American Institute for Foreign Study (“AIFS”). Archer-Lock is the controller of AIFS and Tabaczynski is the CFO of AIFS’s high school travel division ACIS. AIFS a student exchange organization that organizes educational and cultural exchange programs throughout the world. Founded in the U.S. in 1964‚ AIFS has annual revenues of close to $200 million and sent more than 50‚000 students
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nl/locate/econbase Exchange rate exposure‚ hedging‚ and the use of foreign currency derivatives George Allayannis a‚* ‚ Eli Ofek b a b Darden Graduate School of Business Administration‚ University of Virginia‚ PO Box 6550‚ Charlottesville‚ VA 22906‚ USA Stern School of Business‚ New York University‚ 44 West 4th St. #908‚ New York‚ NY 10012‚ USA Abstract We examine whether firms use foreign currency derivatives for hedging or for speculative purposes. Using a sample of
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