Request PDF on ResearchGate | Hedging Currency Risks at AIFS | SUBJECT AREAS: Currency, Foreign exchange, Foreign exchange rates. 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. In order to limit or eliminate this risk, AIFS has to hedge their currency exposure. At the moment the company hedges % of their exposure using forward.

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AIFS sets guaranteed prices for its exchanges and tours a year in advance, before its final sales figures are known. Their customers have the possibility to go abroad while the AIFS organises the whole trip for them. Due to their business model the revenues of the company are denominated only in USD, since the offer is for American students who pay in USD.

The firm’s revenues are mainly in U. It was still unclear though how fast customer demand for robust compliance programs would affect the competitive dynamics. Did competitors that maintain non-compliant practices have an Achilles heel that NG could exploit? Afis Answer is very helpful for Us Thank you a lot! The text analysis of your case should be about pages double-spaced.

The impact on the cost if nothing is hedged arises merely from the difference in the spot rate and is much stronger than in the hedged case. Hi there, would you like to get such a paper? That means, with the current spot rate of 1. How about make it original? In order to limit or eliminate this risk, AIFS has to hedge their currency exposure. How to cite this page Choose cite format: George Serafeim and Shannon Gombos.

The company’s controllers review the hedging activities of AIFS. Ag addition the company should continue to deal with 6 different banks to reduce the counterpart risk.


Suppose ajfs company has fixed the prices for the current season and now the costs in Europe are one million euros, while the exchange rate is at 1. How should NG go about convincing its customers? That means AIFS would have to pay the option premium in any case but this strategy allows to profit from unlimited favourable movements while limiting losses by the premium.

HBS Case: Hedging Currency Risks at AIFS Essay

Thus costs would increase by The higher the costs turn out, the higher this negative effect would be in nominal amount. Hi, I am Sara from Studymoose Hi there, would you like to get such a paper? In the following table the impact on the costs in different scenarios are summarized using the heddging methodology as in the table above. The remainder of your paper should support your conclusion and recommendations.

If you need this or any other sample, we can send it to you via email. Your Answer is very helpful for Us Thank you a lot! Finance Globalization Health Care.

Business and Environment Business History Entrepreneurship. Hi there, would you like to get such a paper? We will write a custom sample essay on HBS Case: How curdency receiving a customized one?

Could Arabesque be something different in the world of asset management? Sorry, but copying text is forbidden on this website!

Hedging Currency Risks At Aifs Essay Example | Studymoose

If you contact us after hours, we’ll get back to you in 24 hours or less. The biggest stake of the costs are in euro and pound sterling, hence these two currencies are of major concern.

So if the spot rate at expiry is higher than the strike price, AIFS can exercise their option and buy foreign currency for the lower strike price.


How to cite this page Choose cite format: 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.

If you need this or any other sample, we can send it to you via email. Having brought employees on board, he was planning to relentlessly engage customers, regulators, and security agencies. Meanwhile rissks costs of the company is mostly denominated in foreign currency because AIFS has to pay the transport, the hotel and much more in the countries in aids their customers are travelling, hence the firm has to pay in the local currency of these countries.

How about receiving a customized one? We use cookies to give you the best experience possible. How about make it original? Hedgijg, George, and Shannon Gombos.

Hedging Currency Risks at AIFS Essay

ar In total the costs still sink by 3, because the effect of the lower spot rate compensates the premium. Building a Values-Based Asset Management Firm A George SerafeimRebecca Henderson and Shannon Gombos At Barclays Capital, Omar Selim had spearheaded the development of Arabesque—a new socially responsible asset management firm designed to appeal to all investors wishing to invest according to broadly held environmental and social values, hesging well as to investors wishing to align their investments with their faith.

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Your write-up should begin with an opening paragraph that defines the main problem in the case and your recommended solution. DesaiVincent Dessain and Anders Sjoman. Leave your email and we will send you an example after 24 hours