Key Concepts and Skills
the basics of forward and
Understand how derivatives can be
used to hedge risks faced by the
25.1 Derivatives, Hedging, and Risk
25.2 Forward Contracts
25.3 Futures Co
In what way(s) is Tiffany exposed to exchange-rate risk subsequent to its new distribution
agreement with Mitsukoshi? How serious are these risks?
Should Tiffany actively manage its yen-dollar exchange-rate risk? Why or why not?
B.F. Goodrich Rabobank Interest Rate Swap
1. How large must the discount (x) be to make this an attractive deal for Rabobank?
2. How large must the annual fee (F) be to make this an attractive deal for Morgan Guaranty?
3. How small must the