Get your hedging currency risks at aifs case solution at thecasesolutionscom thecasesolutionscom is the number 1 destination for getting the case studies analyzed. Hedging currency risk at aifs describe firm/firms: o student exchange organization, american institute for foreign study (aifs) o receives most of its revenues in american $ (usd), but incurred costs in other currencies,. Hedging currency risks at aifs case analysis, hedging currency risks at aifs case study solution, hedging currency risks at aifs xls file, hedging currency risks at aifs excel file, subjects covered currency exchange rates hedging by mihir a desai, anders sjoman, vincent dessain source: hbs premier case collection 17 pages publicatio. 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.
Hedging currency risks at aifs essay currency hedging simply means to the control cost of foreign exchange in future - hedging currency risks at aifs essay introduction the aifs used currency hedging to protect its bottom line from damaging their exchange rates in relation to the american students sent abroad for their studies. Hedging currency risks at aifs group name: jasen turnbull section: sect 300 (2:30-3:45pm, mon & wed) date: october 26 th, 2010 1) there are several factors that give rise to currency exposure at aifs one of these is the fact that most of their revenues are denominated in usd ($) but most of the expenses they incur are in foreign currencies (mainly euros and british pounds. The american institute for foreign studies (aifs) organizes study abroad and cultural exchange for american students the company has revenues are mainly denominated in us dollars, but most of its costs are in euros dollars and british pounds.
This case is about hedging currency risks at aifs get your hedging currency risks at aifs case solution at thecasesolutionscom thecasesolutionscom is the number 1 destination for getting the. Hedging currency risk at aifs case synopsis: the american institute for foreign study (aifs) is a student exchange organization based in london through its companies, aifs is responsible for sending 50,000 students on international exchanges annually with yearly revenues of about $200,000. Hedging exchange risk is a strategy that should be considered during periods of unusual currency volatility because of their investor-friendly features, currency etfs are ideal hedging. 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. The professionals hedging currency risks at aifs want to be sure that the corporation sufficiently hedges its overseas trade risks and accomplishes an sufficient equilibrium among its ahead contracts and currency choices.
Aifs uses two different pricing decisions for the college and high school travel divisions both programs take into account their cost base, competitive pricing and the hedging activities the college division worked from july 1 to june 30, or the academic planning year. 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. More essay examples on currency rubric 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. Hedging currency risks at aifs harvard case study solution and analysis of harvard business case studies solutions – assignment helpin most courses studied at harvard business schools, students are provided with a case study majo. The currency exposure at aifs can be measured by competitive pricing risk, volume risk, and bottom line risk such risks are bound to happen in this organization due to their poor hedging policies therefore, the organization must come with effective hedging policies to withstand the currency exposure and operate a sustainable organization.
Hedging currency risk at aifs essay 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 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. The american institute for foreign study (aifs) is offering cultural exchange programs for american students and high school pupils throughout the world. The case with no hedging if the exchange rate remains constant at $1 dollars the impact would be positive01/euros then aifs will save $5 before its final sales figures are known892391 the actual dollar costs would be above $1220020322/euros then aifs will not incur a. Aifs currency hedging system hedging refers to a risk investment strategy used to safeguard against risk due to changes in the price of assets or currency exchange rate aifs used hedging to protect itself against constant changing exchange rate between the dollar and the euro.
The main hedging technique of aifs is forward contracts, so if the exchange rate at the contract date is higher than the exchange rate at the settlement date, aifs is at a disadvantage (maybe aifs can choose currency options at this time, but it needs to pay. 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 year, and. 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. Currency hedging at aifs essay sample 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.
Hedging currency risks at aifs case solution furthermore, the external environment threats have significant negative impact on the sales, such as terrorist attacks, military coups in the country, and civil war in the visiting country, these all factors negatively affect the sales, because no one will be ready for taking risk on for any educational or cultural exchange program. 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 american institute for foreign study besides known as aifs is a pupil exchange organisation that specializes in academic and cultural exchange plans for both college and high school pupils the aifs was founded by sir cyril taylor in 1964 in the united states and is split into two divisions: the study abroad college division. International finance 1 case presentation hedging currency risks at aifs objectives the case provides an introduction to how currency mismatches create exposures.