Case Study Report, business and finance homework help

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Business Finance


These are the case question, must be answered

  1. Why is Cain concerned by the exchange rate fluctuation? Is her position long or short?
  2. If Can decides to use options would she use a put or a call?
  3. Calculate the impact of the two hedging strategies and the unhedge positionunder the following three scenarios at the end of January:
  4. US$ = C$
  5. US$ = C$0.90
  6. US$ = CS1.10 (to simplify, ignore difference in time value over the 3-month period.)
  7. Should Cain hedge her position in US$? Why or why not?
  8. Which hedge should she use?
  9. If you chose the option, specify the option price.

The paper should consist a brief description of the case, an explanation of the problem, alternative solutions, your recommendations, including materials, such as spreadsheets, needed to justify your recommendation

The case

Pixonix Inc. - Addressing Currency Exposure.pdf

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Explanation & Answer

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Addressing Currency Exposure
Student’s Name
Professor’s Name
Course Title




Brief description of the case
The case describes the methods of addressing currency exposure at Pixonix Inc. Pixonix
Inc. was a graphic design. It was based in Toronto, Canada. Pixonix Inc. Licensed proprietary
tools and software through the use of a U.S. Company. Notably, the company utilizes both the
Canadian dollar and the US. dollar. This has an implication that the company has to convert its
Canadian dollar cash flows into U.S dollars. At a time when the Canadian dollar strengthened, it
was to the advantage of Pixonix since this impacted both cash flows and profitability positively.
However, the company was faced with uncertainties concerning the Canadian Dollar and this
negatively affected the decisions that the management needed to make.
Remarkably, there is a time when the Canadian dollar was higher in value than the U.S.
dollar. This was in the early 1970s. It was during the technological boom of the 1990s when the
Canadian Dollar fell in comparison to the U.S. dollar. After that, the value rose due to the
primary oil exports. The Canadian economy also strengthened resulting in the rise in the
Canadian dollar.
Cain, the chief financial off...

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