Comparison of Hedging Techniques

Read through section 11-2d, Exhibit 11-3, Comparison of Techniques to Hedge Payables, on page 360 of Chapter 11 in the textbook.

 

Answer the two questions:

1. What is your new value for the money market hedge? Would this affect your initial decision from reading through section 11-2d? Discuss the drawbacks from using a different hedging technique.
2. Consider the limitations of using the loan proceed either for debt payment or firm’s investment in the money market hedge.

 

Guidelines for Submission: Your submission must be submitted as a one- to two-page Microsoft Word document including calculations (in your Word doc or an Excel spreadsheet), with double spacing, 12-point Times New Roman font, one-inch margins, and at least three sources cited in APA format.