Chapter 7:dealing with foreign exchange
Name:andy pan student number:094171726
Q1:is currency hedging worth it for
A:I’m in stand of currency hedging is worth for Markel.we can easily find from case that currency’s exchange rate isn’t stable all the
For example,euro would be $1.18 in 1999,but euro declined sharply in 2000.and it is also very funny the exchange rate between us dollars and euro recovery currenty.
What I want to say is, exchange rate ups and downs in the long run.currency hedging is not only the challenge ,but also the opportunity for firms.
The key question for corporation is whether the CFO make the right bet or not.if your firm make the bet in the right time,currency hedging can take a chance that Markel will make profit by doing nothing.
In the last paragraph,we find the proof the Markel began to reap windfalls ,helped by the war in iraq and nervousness about the US
Q2:can Markel improve performance of its currency hedging?
A:I think it is definitely yes ,Markel can improve the performance of its currency hedging.
Just as mentioned earlier,exchange rate isn’t in the same level all
The performance of one firm’s currency hedging depends on this
firm’s administration.if one firm want to improve the performance ,it is better to search and analysis imformations about global market and foreign exchange rate.
Imformations about exchange rate is the key factor to this issue’s
determination.if Markel’s department of finacial officer focus more attention on the currency hedging,it is absolutely can improve the performance of currency hedging and make more dollars for Markel.
Q3;other than currency hedging,what other currency manegement strategies can
A:I think the currency hedging is not the only choice for Markel.some,sucn as IBM ,focus on strategic hedging(gegoraphically dispersing activities).but refrain from currency hedging.
And we also can find some useful imformations about this issue from case’s paragraph one ,Markel also has two srtategies to protect itself from currency fluctuations :1.charge customers stable prices in their own currencies and 2 . use forward contracts.
I still have few problems about my english,if I have any mistake,please point out!