Hedge Vehicles and Hedge Risk

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Cain was so much concerned with the exchange rate fluctuations between Canada and the United States. Her concerns were for the reason that she was the chief financial officer of Pixonix Inc. a graphic design corporation that carried it is operation in Toronto, Canada and the company’s expenses were paid in U.S. dollars

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Hedge Vehicles and Hedge RiskStudent Name:Instructor:College:Date:Question one:Cain was so much concerned with the exchange rate fluctuations between Canada and theUnited States. Her concerns were for the reason that she was the chief financial officer ofPixonix Inc. a graphic design corporation that carried it is operation in Toronto, Canada and thecompanys expenses were paid in U.S. dollars. Cains concerns were for a long position sinceshe wanted to analyze the impact of the exchange fluctuation on the corporations cash flows, sothat she can be able to manage the firms currency risk. The Canadian dollar against theAmerican dollar continued to be sturdier and according to the report from jobs reduced thechances of an interest rate cut after a stronger than anticipated results.Question Two:Financial contracts between two parties are known as options. The contract has thepurchaser has one party and the broker has the other party selling the asset. For betterunderstanding, options and insurance seem to be much the same because in both (options andinsurance), the buyer of the option can cash them when the future prices drop and cannot collectthem if th
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