Given this background you may benefit from looking at the following issues for

Given this background you may benefit from looking at

This preview shows page 1 - 2 out of 2 pages.

contents of its mined ore. Given this background, you may benefit from looking at the following issues for your case analysis of ABX. 1. In the absence of a hedging program using financial instruments, how sensitive would ABX’s stock price be to gold price changes? How would have ABX’s profits and stock price affected in 1991 and 1992 from a 1% change in gold price? How could ABX manage its gold price risk without the use of financial contracts? One way to look at the effect of a 1% change in gold price on ABX’s profits is to look at its profits with and without hedging using the information in Exhibits 3, 8, and 12. 2.What is the stated policy goal of the ABX’s price risk hedging program? What should be goal of a gold mine’s risk hedging program? Were ABX’s risk management activities consistent with its policy goal? 3.What are some of the popular arguments, in theory, to manage gold price risk? You may look into potential areas such as focusing on the firm’s operating efficiencies (absence the price risk),
Image of page 1
4. Demonstrate using the data from the case whether or not ABX has been able to create value for its shareholders up until 1992 both in an ex-ante and ex-post sense.
Image of page 2

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture