http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?E=12635&R=286118-PDF-ENG&conversationId=1967043J.C. Penney (B)

Scott P. Mason, William B. Allen Teaching Note

 Educator Copy

Revision Date: Jun 20, 1986Publication Date: Apr 17, 1986Discipline: FinanceSource: Harvard Business School

Product number:

286118-PDF-ENGLength: 21p

English PDF

Also Available in:

English Hardcopy Black & White

 SHOW DETAILS

DESCRIPTION

Penney's assistant treasurer was considering various capital markets issues to finance store modernizations. This case provides the financing terms available to Penney for domestic, current, and zero coupon debt. Eurodollar debt, and nondollar SFr and Yen issues hedged and swapped back to dollar liabilities. Also, Penney is considering using interest rate futures, options, and options on futures to hedge a forthcoming debt issue.

http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?E=12784&R=286109-PDF-ENG&conversationId=1967043Applications for Financial Futures

Scott P. Mason, Sally E. Durdan Teaching Note

 Educator Copy

Revision Date: Jul 28, 1986

Publication Date: Mar 28, 1986

Discipline: Finance

Source: Harvard Business School

Product number:

286109-PDF-ENG

Length: 23p

English PDF

Also Available in:

English Hardcopy Black & White

 SHOW DETAILS

DESCRIPTION

Consists of a series of four brief descriptions of the use of financial futures as hedging vehicles: a savings and loan hedging the rollover of three-month money market certificates with T-bill futures, a corporate debt issuer hedging the cost of a future debt issue with T-bond futures, an equity investor hedging a decline in the market, and an example of a company with a natural interest rate hedge on its balance sheet. The examples describe the details of T-bill, T-bond, and S&P 500 stock index futures. Issues addressed include variation margin and basis risk (due to differences in the securities underlying the cash and futures positions, changes in the carry, etc.).

http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?E=77272&R=UV0738-PDF-ENG&conversationId=1967043Baker Adhesives

Marc Lipson Teaching Note

 Educator Copy

Revision Date: Oct 19, 2010

Publication Date: Jan 25, 2007

Discipline: Finance

Source: Darden School of Business

Product number:

UV0738-PDF-ENG

Length: 6p

English PDF

Also Available in:

English Hardcopy Black & White

 SHOW DETAILS

DESCRIPTION

This is a Darden case study.

A small adhesives company faces exchange-rate risks as it makes its first foray into international sales. The receipt of payment from an unhedged foreign currency denominated past sale illustrates potential currency risks while a potential follow-on order provides a context to discuss potential hedges. Additional richness is provided by the fact that the follow-on sale appears unprofitable unless the analysis acknowledges the irrelevance of overhead and that the market value of raw materials is below book value.

http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?E=76506&R=UV0018-PDF-ENG&conversationId=1971386

Delta Beverage Group, Inc.

Kenneth Eades Teaching Note

 Educator Copy

Revision Date: Jan 10, 2000

Publication Date: Oct 13, 1997

Discipline: Strategy

Source: Darden School of Business

Product number:

UV0018-PDF-ENG

Length: 20p

English PDF

Also Available in:

English Hardcopy Black & White

 SHOW DETAILS

DESCRIPTION

This is a Darden case study.

Delta Beverage is facing severe cost control problems. In addition to the high interest expense, the cost of aluminum cans and PET containers has risen substantially during the past year. Students must decide whether the CFO should hedge aluminum to avoid the risk of violating a loan covenant.

Learning Objective:

To analyze the risk of a decision and take action.

FULL PRODUCT INFO

http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?E=14503&R=297022-PDF-ENG&conversationId=1971386

CASES

Grupo Sidek (A)Kenneth A. Froot, Alberto Moel

 Educator Copy

Revision Date: Jul 14, 1997

Publication Date: Sep 17, 1996

Discipline:

Product number:

297022-PDF-ENG

Length: 21p

English PDF

Finance

Source: Harvard Business School

Also Available in:

English Hardcopy Black & White

 SHOW DETAILS

DESCRIPTION

A large Mexican conglomerate, active in tourism, real estate, and steel, is faced with difficult macroeconomic conditions beginning with the Peso crisis of December 1994. The conglomerate had extensive dollar-indexed liabilities and was caught in a crunch when the Mexian Peso lost half its value against the dollar in late 1994. Even though a large portion of its revenues were also dollar-indexed, thus ostensibly providing a foreign exchange hedge, most of the conglomerate's customers were Mexican nationals. With the ensuing recession in 1995, the revenue base dried up, but the dollar liabilities were still outstanding. The case covers the period from late 1994 to February 1995 and deals with the financial and operational decision that Sidek had to face at that time.

Learning Objective:

To demonstrate the effect of foreign exchange and macroeconomic volatility on the real and financial assets and liabilities of a company with large foreign exchange and economic exposure.

FULL PRODUCT INFO

http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?E=12700&R=287033-PDF-ENG&conversationId=1971386Foreign Exchange Market, Background Note and Problem Set

W. Carl Kester, Richard P. Melnick Teaching Note

 Educator Copy

Revision Date: Sep 05, 1991

Publication Date: Feb 23, 1987

Discipline: Finance

Product number:

287033-PDF-ENG

Length: 12p

English PDF

Also Available in:

English Hardcopy Black & White

 SHOW DETAILS

DESCRIPTION

Discusses the background of the foreign exchange market. This includes information about the participants and how the market operates. The problem set verses students in the arithmetic in the many common foreign exchange problems such as calculating forward premium and discounts, determining hedge ratios, covered interest arbitrage, etc

http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?E=9135&R=205074-PDF-ENG&conversationId=1973174Advising on Currency Risk at ICICI Bank

George Chacko, Marti G. Subrahmanyam, Vincent Dessain, Anders Sjoman

 Educator Copy

Revision Date: Feb 21, 2006

Publication Date: Mar 22, 2005

Discipline: Finance

Source: Harvard Business School

Product number:

205074-PDF-ENG

Length: 16p

English PDF

Also Available in:

English Hardcopy Black & White

 SHOW DETAILS

DESCRIPTION

In March 2003, a client approached the Markets Advisory Group at ICICI Bank, India's second largest bank, about a hedging transaction. The hedge involved multiple interest rates and currencies. Shilpa Kumar, head of the Markets Advisory Group, has to put together a recommendation for the client. She can choose from a number of financial instruments, including swaps, options, and futures contracts on interest rates and currencies, in her recommendation.

Learning Objective:

To learn how to apply knowledge of financial derivatives such as options, futures, and swaps in a practical situation: a hedging decision by a corporation.

http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?E=1748&R=108038-PDF-ENG&conversationId=1976352Wal-Mart's Use of Interest Rate Swaps

Michael D. Kimbrough, Michael Faulkender, Nicole Thorne Jenkins, Rachel Gordon

 Educator Copy

Revision Date: Jul 22, 2010

Publication Date: Jan 17, 2008

Discipline: Finance

Source: Harvard Business School

Product number:

108038-PDF-ENG

Length: 22p

English PDF

Also Available in:

English Hardcopy Black & White

 SHOW DETAILS

DESCRIPTION

"Wal-Mart's Use of Interest Rate Swaps" recounts Wal-Mart's use of interest rate swaps to hedge the fair value of its fixed-rate debt against changing interest rates. This case provides students with a foundation for understanding the use of and accounting for more complex derivatives. Specific issues raised include: (1) the financial statement impact of hedge accounting, (2) motivations for using derivatives, including the potential role of accounting standards, and (3) the degree to which financial statement and MD&A disclosures are sufficiently informative about the risks associated with financial instruments.

Learning Objective:

Provide students with an understanding of the uses and accounting for interest rates swaps and more complex derivatives.

FULL PRODUCT INFO

http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?E=1203156&R=908N13-PDF-ENG&conversationId=1977520Pixonix Inc. - Addressing Currency Exposure

Colette Southam, Karim Moolani Teaching Note

 Educator Copy

Publication Date: Jun 05, 2009

Discipline: Finance

Source: Richard Ivey School of Business Foundation

Product number:

908N13-PDF-ENG

Length: 4p

English PDF

Also Available in:

English Hardcopy Black & White

 SHOW DETAILS

DESCRIPTION

The chief financial officer of Pixonix Inc. is trying to decide if she should hedge, given the current strength of the Canadian dollar. Her company licenses proprietary software through a U.S. company that will cost $7.5 million in three months time. The case provides the students with the opportunity to understand the impact of exchange rate fluctuations on her firm's cash flows and some of the instruments available to manage risk, including puts and calls and forward contracts.

Learning Objective:

This introductory case will allow students to: • Understand and quantify risks (revenue and costs) associated with exchange rate fluctuations • Understand some of the instruments available to manage risk, including puts and calls and forward contracts. This case is intended for an introductory finance class or as an early case in a class on derivatives or international finance. No prior knowledge of options and forward contracts is needed to undertake the case.