1. The Montreal Expos are a major-league baseball team located in Montreal, Canada. What currency risk is faced by the Expos, and how can this exchange risk be managed?
2. General Electric recently had to put together a $50-million bid, denominated in Swiss francs, to upgrade a Swiss power plant. If it won, GE expected to pay subcontractors and suppliers in five currencies. The payment schedule for the contract stretched over a five-year period.
a. How should General Electric establish the Swiss franc price of its $50-million bid?
b. What exposure does GE face on this bid? How can it hedge that exposure?