California State University Long Beach Volkswagen Hedging Strategy Paper

Description

Volkswagen’s Hedging Strategy
Embraer and the Wild Ride of the Brazilian Real
Subaru’s Sales Boom Thanks to the Weaker Yen
What did you learn from these stories about hedging foreign exchange rate risk?

Why did Volkswagen suffer a 95% drop in its 4^th quarter, 2003 profits?
Do you think the Volkswagen’s decision to hedge only 30% of its anticipated U.S. sales was a good? Why or why not?
Do you think the Volkswagen’s decision to revert back to hedging 70% of its foreign currency exposure was a good decision? Why or why not?

YOUR ANSWER

Is a decline in value of the real against the U.S. dollar good or bad for Embraer? Why?
How can Embraer reduce these risks?
Do you think Embraer’s decision to hedge against further appreciation of the real in the early 2000s was a good decision? Why or why not?
Since 2008 Embraer has significantly reduced its dollar hedging operations. Is this wise? Why or why not?

YOUR ANSWER

Why has Subaru concentrated its manufacturing in Japan?
What was the impact of the depreciation of the yen on Subaru’s profits since 2012?
Why is Subaru increasing its US production? Do you think it is a good decision? Why or why not
What did you learn from these stories about hedging foreign exchange rate risk?

NO CREDIT will be given if you do not follow the directions below
At least full 2 pages including original questions
- Font size=12, line space=1.5, margins=1 inch on all sides
Submit at BeachBoard. Plagiarism will be checked.
Only complete answers to ALL questions will receive credit (No partial credit)
Provide separate answers for each question. Do not delete the questions

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