Describe in words the hedging strategy that the company should take in each of these cases....

Describe in words the hedging strategy that the company should take in each of these cases. Remember that a possible answer is that the company should not be hedging at all. (1 paragraph maximum for each)

a). A US manufacturing firm that produces in the US and sells cars in Europe would like to reduce the effect of currency fluctuations on its profits.

b) A CFO believes that the price of oil (one of the company’s main inputs) is going to increase, and wants to generate profits from this increase.

Expert Solution

Rahul Sunny answered 2 years ago

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