Compare and contrast the different methods of hedging transaction exposure


BSAD 680 Final Exam


Answer four of the following seven essay questions. Essay answers should be in paragraph form using complete sentences. (No bullet points) Use APA style for citations as needed. Exams may be subject to student submission using Turnitin at the professor’s discretion. Your answers should be submitted as a Word file attached to an email sent to me by the start of class on March 5th. While brevity is the soul of wit, essay answers should err on the side of completeness versus brevity. That said, I don’t want to see the answer to any question go beyond two single-spaced typewritten pages using a font size of 10-12 points.

  1. Congratulations! You have just been elected ruler of a small LDC. What steps will you take to manage the country’s balance of trade, and its currency? Name and use an actual country – don’t make one up.
  2. Compare and contrast the different methods of hedging transaction exposure. Include both derivative and non-derivative solutions.
  3. Compare and contrast a plain vanilla currency swap with a plain vanilla interest rate swap. Describe and justify a situation where a MNC would use each type of swap.
  4. Discuss the issues and potential solutions for a MNC contemplating foreign direct investment in a LDC.

10 Pages