Cases
Case 18.1: Ups and Downs — A foreign exchange simulation game
Points to Consider
- Because you will receive payments in three months, do you think that there is any need to hedge your exposure?
- Assuming that hedging is desirable, what is your hedging preference: cash, forward, futures, or options?
- Do you want to hedge both the Japanese yen and euro?
- When do you want to hedge? (Note: You can hedge anytime within three months).
- Consider the exchange rates at the end of the three-month period and see how the profit from the sale of your products is affected by the rate changes as determined by your decisions.
Instructor Notes
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