In case aifs does not hedge at all, the costs either decrease by $5,250,000 if the exchange rate is 101 usd/eur, or remain unchanged in the 'zero impact' scenario or increase by $6,500,000 if the exchange rate is 148 usd/eur. Hedging currency risks at aifs how does aifs make money what gives rise to currency risk at aifs what are the risks they face case analysis what would happen with 100% hedge with forwards. Aifs write a report about the case study using the following the 4 guidelines: 1 completeness: address all the issues of the case provide managerial guidance provide both quantitative and qualitative analysis to support your guidance use of all the relevant data in the case text. Instructions: this case should be done individually you should prepare a written analysis, and hand in two copies of your analysis on april 12 in class. The local aifs resident director and staff organize cultural activities and housing, act as a liaison between students and the university, and are available 24/7 in case of emergencies comprehensive insurance and assistance package.
In case b, the best case, if aifs hedged at $122 (the strike price) at a cost of 105% ($128) and the cost of the euro declined to $101 then aifs would benefit due to greater buying power of the dollar vs the euro. • the corresponding case study decribes the challenges for the aifs - a us company specialized on college and high school exchange programs for travelling abroad - of hedging currency risks due to their catalog based business model aifs with its annual group turnover of around $200 millions is a well known and established competitor in. Aifs make a profit if the dollar appreciates so long as they have the capital to cover the purchase of euro from the counterparty251 1231 1251 1 aifs loose nothing if the exchange rate remains stable2278 1. Hedging currency risks at aifs case study help, case study solution & analysis & as a result of fluctuations of yen/greenback trade amount, hedging currency risks at aifs the brand new distribution agreement with mitsukoshi gave increas.
Aifs case study essay this case shows us the problems faced by aifs due to the fact that it receives most of its revenues in us-dollars but with its costs incurred in foreign currencies (euros and pounds. With respect to the case of aifs, if it hedges 100 percent and the strike price is same as the future spot price, it would not bring any loss or any gain only the cost that would be incurred in this way is the option premium price.
Case synopsis christopher archer-lock and becky tabaczynski both work for american institute for foreign study (aifs) archer-lock is the controller of aifs and tabaczynski is the cfo of aifs's high school travel division acis. The second type of risk aifs encountered was sales volume risk since currency is traded based on projected sales, the actual sales amount at the end of the financial period could vary from the projections and a lower actual sales volume could be very damaging to aifs financially. Minimum 25 gpa required (lower gpas will be considered on a case-by-case basis) earn 3 semester credits program fee includes tuition, housing, some meals, cultural activities such as film location walking tours and a paris river cruise, and more.
Aifs sets guaranteed prices for its exchanges and tours a year in advance, before its final sales figures are known if the dollar depreciates against the euro during this period, aifs's cost would be higher when measuring in dollars, and negatively impact the firm's profit. Hedging currency risks at aifs, we shall now address the many stipulations regarding issues such as currency exposure and hedging decisions of the aifs company looking at the theory and practices of archer-lock within the company, with the information given we shall now analyze and interpret the. Engineering economic analysis case study case name the smithson's mortgage case study teams this case is designed to be conducted by a team of students the discussion, questioning, and resolution of differences is an important part of the learning experience.
Hedging currency risks at aifs case solution furthermore, the external environment threats have significant negative impact on the sales, such as terrorist attacks, military coups in the country, and civil war in the visiting country, these all factors negatively affect the sales, because no one will be ready for taking risk on for any educational or cultural exchange program. Hedging currency risks at aifs problem statement: the problem identified in this case is, to determine that which option is best in different scenarios with respect to the fluctuation in exchange rates. 2 payment we understand aifs' policy of guaranteeing prices is paramount to the firm's success, as it is one of the key drivers in retaining your customer base's trust and loyalty to your program.
Hedging currency risks at aifs case solution introduction american institute for foreign study (aifs) organizes the educational and cultural exchange programs throughout the world. Hedging currency risk at aifs case synopsis: the american institute for foreign study (aifs) is a student exchange organization based in london through its companies, aifs is responsible for sending 50,000 students on international exchanges annually with yearly revenues of about $200,000. Aifs study abroad outcomes volume ii (2018) revisiting and expanding on our 2010 offering, this publication is a longitudinal study of personal, intercultural and career development based on a survey of aifs alumni from 1990 to 2017.
Aifs case analysis 1) there are several factors that give rise to currency exposure at aifs one of these is the fact that most of their revenues are denominated in usd ($) but most of the expenses they incur are in foreign currencies (mainly euros and british pounds. Hedging currency risks at aifs case solution, the american institute of foreign studies (faa) organizes study abroad and cultural exchange for american students the revenues of the company are mainly. Hedging currency risks at aifs case study solution, hedging currency risks at aifs case study analysis, subjects covered currency exchange rates hedging by mihir a desai, anders sjoman, vincent dessain source: hbs premier case collection 17 pages. Hedging currency risks at aifs harvard case study solution and analysis of harvard business case studies solutions - assignment helpin most courses studied at harvard business schools, students are provided with a case study.