11. Describe in words the hedging strategy that the company should take in each of these cases. Remember that a possible answer is that the company should not be hedging at all.
a) A Japanese manufacturer would like to hedge against the risk that the Yen will appreciate against the Euro, since the manufacturer has significant revenues in Euros.
b) A US company expects to make a one-time payment of 100 million Mexican Pesos in about 12 months, and would like to hedge against the risk that exchange rates may change during the year.
c) A CFO from an oil company believes that oil prices will decrease and wants to profit from this belief by investing in futures.
d) A CFO from a technology firm is concerned that interest rates will increase, affecting the cost of equity for the company in the next few years.