Assignment: Hedging Currency Exposure
1) Why do firms borrow in foreign currencies? Was Sask Power justified in borrowing in US dollars?
2) Should Sask Power be concerned with fluctuations in the U.S. dollar exchange rate?
3) What is a foreign currency swap? Can foreign currency swaps help Sask Power hedge the currency exposure in its U.S. dollar debt?
4) How would you assess whether the swap proposed in the case is a fair deal?
5) If you were in the place of the management of Sask Power in 2002, would you consider hedging the currency exposure? If yes, which hedging strategy would you adopt?
Format your assignment according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.