The american institute for foreign studies (aifs) organizes study abroad programs and cultural exchanges for american students the firm's revenues are mainly in us dollars, but most of its costs are in eurodollars and british pounds the company's controllers review the hedging activities of aifs aifs has a hedging. As often before, they had discussed foreign exchange hedging, an area of key importance for the company aifs received most of its revenues in american dollars (usd), but incurred its costs in other currencies, primarily euros (eur) and british pounds (gbp) the currency mismatch was natural given aifs's business: it. This case is about hedging currency risks at aifs get your hedging currency risks at aifs case solution at thecasesolutions. Aifs sets guaranteed prices for its exchanges and tours a year in advance, before its final sales figures are known the controllers need to ensure that the company adequately hedges its foreign exchange exposure and achieves an appropriate balance between forward contracts and currency options. Hedging currency risk at aifs : assignment questions: q what gives rise to the currency exposure at aifs a aifs is a company that specializes in providing educational and cultural exchange programs for college and high school students overall the company provides services to approximately 50,000 students each. Hedging currency risk at aifs 2629 words nov 11th, 2010 11 pages summary aifs is an american based company that offers travel abroad and exchange study services to both college and high school students while aifs's revenues are denominated in american dollars (usd), most of their costs are in foreign.
Free essay: plekhanov russian economic university international financial management case study report hedging currency risks at aifs professor: yulia. Citation: desai, mihir a, and kathleen luchs hedging currency risks at aifs ( tn) harvard business school teaching note 206-025, september 2005 about the author photo mihir a desai mizuho financial group professor of finance finance entrepreneurial management view profile » view publications.
Aifs will realize we are able to utilize the aifs shifting box to determine what the reactions to differing sales volume versus the exchange rate if the volume is low and the to hedge against this potential risk because aifs will not be locked into a specific rate, as is the case with risk at aifs aifs case study solutions. Hedging currency risks at aifs, we shall now address the many stipulations regarding issues such as currency exposure and hedging decisions of the.
Hedging currency risks at aifs case questions 1037 words jul 4th, 2012 5 pages session 4 case questions innocents abroad: currencies and international stock returns the goal of this case is to help sandra meyer develop a presentation to address henry bosse's concerns about international investments.
In consequence of the fluctuating exchange rate of usd against foreign currencies and the fact that aifs fixes the price for their services before the costs can be estimated, the firm faces an inevitable currency exposure in order to limit or eliminate this risk, aifs has to hedge their currency exposure at the moment the.
Hedging currency risks at aifs problem statement: the problem identified in this case is, to determine that which option is best in different scenarios with respect to the fluctuation in exchange rates q1 - what is the cause of currency exposure at aifs currency exposure currency exposure or foreign. Subject areas: currency, foreign exchange, foreign exchange rates, hedging, travel case settings: london education industry travel industry $200 million. Traditional insurance or a derivative product provides the better solution the next four sections walk through risk management options for various to illustrate currency exposure risk, section 4 recommends hedging currency risks at aifs, in which the manager of a us-european study abroad program is reviewing its.