Name one company that benefited and one company that suffered due to the slump in the British Pound post Brexit. What was the type of exposure that resulted in the profit or loss? Did the companies not hedge?
In light of the following article, explain the impact on the company you have chosen for Project 3. ( (hence I suggest choosing a US-listed MNC, you will
have more information)
Translation vs Transaction and Economic
One of the ways to reduce economic and transaction exposure is to restructure. This restructuring involves shifting sources of revenues and costs to other locations in order to match cash inflows and outflows in foreign currencies. Explain the basics of this approach and did the MNC that you chose to write your report on, undertake any such restructuring? Would this restructuring increase translational risk? Does it make sense for an MNC to reduce one risk at the cost of exposing itself to another. Explain.
Investment with FX uncertaintiy
You are an investor and are looking for opportunities where you can invest or short sell in the coming 3-5 years (You have a medium to a long term horizon). You are certain that Donald Trump will try and reduce the trade deficit. Given this piece of information, you believe that this would impact MNC corporations, hence you start looking at the MNC (the one you chose for your report). Variables that you believe are key and might change are the following: Relative Strength of the dollar, Tariffs on imports, incentives on exports, taxes on corporations. Make assumptions about these variables (increase / decrease) and how they will impact the MNC. What is your final recommendation go Long or Short the MNC?