Explore BrainMass

Explore BrainMass

    Managing Exchange Rate Risk

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Multinational corporations need to carefully plan for various risks, including currency risks and the threat of currency crisis in the international market. The currency crisis in Asia was devastating for many corporations. Therefore, it is important for the multinational corporations to prepare themselves for the currency crisis in the global market.

    To complete the Module 2 Case Assignment, please choose FedEx Corporation (http://fedex.com ; http://www.fedex.com/us/investorrelations/financialinfo/goals/) that is listed and traded on the New York Stock Exchange (NYSE: Symbol - FDX).

    Read the information in the background material, look for more information, and then write a 3 to 4 page paper answering the following questions:

    To what extent can exchange rate risks impact on the business operations of the FedEx Corporation? Please explain your reasoning.

    Are there any options that the financial managers of the FedEx Corporation can use to manage exchange rate risk?

    Are there any advantages and disadvantages of the different exchange rate risk management options that you suggested to the financial managers of the FedEx Corporation?

    © BrainMass Inc. brainmass.com June 1, 2020, 11:06 pm ad1c9bdddf

    Solution Preview

    Managing Exchange Rate Risk:

    The act of measuring and managing the various exchange risk exposure is considered to be an important aspect for an organization as it reduces any levels of vulnerabilities which are associated to exchange rate movements which may have adverse effects on the firms profit, margins and the value of assets of an organization. The management of exchange risk is considered to be a central part for every organization's decision when it comes to currency exposure (Edens, 2010).

    Strategies such as currency risk hedging is utilized by firms with an aim of reducing risks associated to exchange rate risk. This strategy requires that firms fully understand the ways in which exchange rate risk may have an effect on the economic agents operations and the various techniques which are normally employed during the act of dealing with the existing implications that arise from a consequent risk.

    Exchange Rate Risk And The Impact On A Corporation:

    For FedEx Corporation, the exchange rate risk can have an impact on the operations of the business in that it has the capability of resulting to large risks arising for the organization especially if the existing risk is not managed. This arises when the corporation becomes engaged in international competition. Alteration of the value of the assets and liabilities which are currently ...

    Solution Summary

    The expert examines managing exchange rate risks.