International Corporate Finance Case Study Assignment
Gaz de France("GDF") Case Study
1. Examine GDF's growth and development between the early 1950s and mid-1980s.
- What determined its borrowing decisions during this period?
- How and why did its liability management practices evolve?
2. As of 1986, what are the primary economic and non-economic variables determining the future profitability of GDF's operations?
- How risky are these operations?
- How well do GDF's capital structure and liabilty management practices complement these operations?
3. Referring to the example provided in the case's appendix on page 18, diagram the unwinding of the five year fixed-rate currency swap after one year to show how GDF has an unrealized gain of FF553.1 million.
Be sure to decompose the swap value changes by separately quantifying the following:
- the exchange rate effect
- the interest rate effect
- the combined effect (do not solve as a plug number)
4. Identify both the range forward and the exotic option in the case and comment on whether or not these derivative-style instruments were appropriately used.
5. As a director of GDF, what aspects of M. Reboul's swap management would you be inclined to approve or disapprove?
- Evaluate his team's efforts to control risk.
- What should he do now about the FF750 million of unrealized gains?
Attachment:- Case Study.rar