When operating internationally, companies incur a number of risks. Not only do they have to deal with their competitors, companies also must account for swings in demand and supply, as well as changes in interest rates and exchange rates. Therefore, hedging techniques are a vital tool for global companies.
Using the Internet, locate an annual report for a multinational corporation (e.g., Coca-Cola, IBM, Microsoft, BP, etc.). Using the selected corporation’s annual report, analyze information about hedging and transaction exposure, economic exposure, and translation exposure.
Analyze the company’s hedging behavior. In a brief essay, 2–4 paragraphs in length, answer the following questions: Why is that company hedging? Against which exchange rate risks does it hedge?