Hedging currency risk at aifs the company's controllers review the hedging activities of aifs aifs has a hedging policy, but the controllers want to review the percentage of exposure that is covered and the use of forward contracts and options case study andrew stern columbia law school india columbia university business conference. International finance 1 case presentation hedging currency risks at aifs objectives the case provides an introduction to how currency mismatches create exposures. After studying and addressing the case study of aifs, it can be concluded that the changes in fees can be the cause to currency exposure the fact that the company’s revenues are in usd, and costs in gbp and euro’s may result in a rise to. Case solution the american institute for foreign studies (aifs) organizes study abroad programs and cultural trades for american students the firm's revenues mostly are in us dollars, but many of their cost is in euro dollars and british pounds. Hedging currency risk at aifs the american institute for foreign studies (aifs) organizes study abroad programs and cultural exchanges for american students.
Hedging currency risks at aifs is a harvard business (hbr) case study on finance & accounting , fern fort university provides hbr case study assignment help for just $11 our case solution is based on case study method expertise & our global insights. Q2 – what would happen if archer-lock and tabaczynski did not hedge at all according to the data given in the case, aifs use to organize programs for students who want to study abroad and also organize the cultural exchange programs. Hedging currency risks at aifs case solution the american institute for foreign studies (aifs) organizes study abroad programs and cultural exchanges for american students the firm's earnings are mainly in us dollars, but most of its costs are in eurodollars and british pounds. Professor ted azarmi's forum » harvard business school style case analysis and case presentations european school of business mba 2005-2010, university of tuebingen 2005-2012, and heilbronn 2010-present.
If aifs were to hedge against currency risk using 100% forward contracts, their position would be fully covered if they can accurately predict the amount and timing of the payments if aifs were to hedge using 100% options, they would be fully covered against currency risk, but would pay an option premium of $1,525,000. Hedging currency risks at aifs case study solution, hedging currency risks at aifs case study analysis, subjects covered currency exchange rates hedging by mihir a desai, anders sjoman, vincent dessain source: hbs premier case collection 17 pages publicatio. Aifs features a hedging coverage but drivers desire to review the share of publicity is roofed as well as hedging currency risks at aifs utilization of futures and selections : foreign currency was bought based on projected sales volumes, which would vary from remaining product sales volumes.
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 currencies as euros (eur) and british pounds (gbp. Hedging currency risks at aifs case questions 1014 words | 5 pages 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. 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. 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. • this case shows us the problems faced by aifs due to the fact that it receives most of its revenues in us-dollars but with its costs incurred in foreign currencies (euros and pounds) aifs uses currency hedging to protect their bottom line and to cope with changes in exchange rates which can.
The higher or lower sales volume would exaggerate whatever gains or losses aifs will realizethe case with option hedging 100% sales volume variation recommendation hedging currency risks at aifs 148$/euro5 million dollars can be spent for 25 million euros there is 25 million euros in underlying exposure892 then 1 year 30. View essay - aifs case finaldylanchrisjen from fin 2230 at villanova university american institute for foreign study currency hedging to: christopher archer-lock, becky tabaczynski from: group 1. Checklist for hedging currency risks at aifs case study memo exhibit is the analysis presented in the case memo - precise, accurate, and data-based are the exhibits clearly laid out, titled, and referenced in the case study memo. In the assigned case, we study two divisions of aifs a college division, a high school travel division, and the possible consequences to aifs’s business exposure with respect to the fluctuations in foreign currency values and other factors. The american institute for foreign studies (aifs) arranges foreign study programs and cultural relation tours forthe students in america the firm's profits are primarily in us currency, but a large number of its costs are experienced in eurodollars and british pounds.
After studying and addressing the case study of aifs, it can be concluded that the changes in fees can be the cause to currency exposure the fact that the company’s revenues are in usd, and costs in gbp and euro’s may result in a rise to currency exposure. Homework: foreign currency transactions and hedging – hedging currency risk at aifs case 1 - hedging currency at aifs introduction what gives rise to the currency exposure at aifs we will write a custom essay sample on hedging currency at aifs or any similar topic specifically for you do not waste your time send by. Hedging currency risks at aifs case solution introduction american institute for foreign study (aifs) organizes the educational and cultural exchange programs throughout the world.
Hedging currency risk at aifs essay sample foreign study (“aifs”) archer-lock is the controller of aifs and tabaczynski is the cfo of aifs’s high school travel division acis. In case of a strong dollar the company would profit the most without hedging but due to the downside trend of the dollar against euro and sterling simultaneously in short and medium term (exhibit 6 & 7) there is reasonable evidence that aifs should be prepared to cover their currency exposure.