Assignment Title: Managing Foreign Exchange Risk in Multinational Corporations
The purpose of this assignment is to analyze and understand the challenges and strategies associated with managing foreign exchange risk in multinational corporations.
1: Corporate Analysis: XYZ Corporation (50 points)
Select the multinational company “XYZ Corporation” and analyze its exposure to foreign exchange risk. Evaluate how the company has managed or failed to manage these risks in the past. Consider the impact on financial statements and overall performance.
2: Political and Economic Factors (25 points)
Investigate the influence of political and economic factors on foreign exchange markets. Discuss how these factors may affect the currency risk faced by multinational corporations and suggest ways to mitigate such risks.
3: Recommendations (25 points):
Based on your analysis, provide recommendations for XYZ Corporation to enhance its foreign exchange risk management. Consider both short-term and long-term strategies.
Category: International Finance
Please address the following questions in your case study:
1. Why is Cain concerned by the current exchange rate fluctuation? Is her position long or short?
2. If Cain decides to use options, would she use calls or puts?
3. Calculate the impact of the two hedging strategies and the unhedged position under the following scenarios at the end of January:
US$ = CAD$;
US$ = $0.90 CAD; and
US$ = $1.10 CAD.
Note: for the hedging strategy with options, for simplification, you can ignore the difference in time values over the 3-month period. Also please analyze with different strike prices.
4. Should Cain hedge her position in U.S. dollars? Why or why not? If you think she should hedge, which vehicle would she use? Note: if you decide to use options, specify the strike price.
To help you understand the case, please see the excel template .
Also please note that there is a typo on page 3 of the case: It should be US$ 7.5 million, not US$ 7 million.
The written analysis of the case may be no more than five typed pages single spaced, 12 point font, 1-inch margins (10 pages double spaced).
I want you to write my assignment related to international finance which is about (The Transformation of Saudi Arabia’s Economy: Vision 2030 and its Impact on
International Finance). There specific goals I want you to write about them and then show how they are related to the topic of the assignment. UNSDGs Focus: Goal 8 (Decent Work and Economic Growth), Goal 11 (Sustainable Cities
and Communities), Goal 13 (Climate Action).
I have uploaded the file of the assignment with all necessary details.
Spend some time reviewing the capital structure of either Boeing or Starbucks. What is their leverage like? It is important to understand the leverage in the capital structure because it impacts the company’s cost of capital. Please describe the technique for calculating a firm’s cost of equity and the firm’s cost of debt. You are required to calculate the WACC for your company. Once you’ve done that please define the weighted average cost of capital. If you did not watch my videos on chapter 13 last week you may have problems with this. Since this is a complicated problem there is no word limit.
Here are the videos he is referring to:
https://www.coursera.org/lecture/finance-for-non-finance/putting-it-all-together-as-the-wacc-weighted-average-cost-of-capital-07ldB