Excellent Knitwear (P) Ltd: The Foreign Currency Derivative Dilemma



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Code : ITF0040

Year :
2015

Case Length : 5 pages

Industry :Textile & Financial Services

Organization:IBS Hyderabad

Period : 2008

Region : India

Teaching Note: Available

Structured Assignment : -

Countries : India

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Abstract:The case study is about an export company based in South India which is facing a challenge with regard to fluctuations in the value of the Indian Rupee in currency market. The company has to take a decision regarding its currency hedging. The case study describes the introduction of currency derivatives and the alternatives available to manage foreign risk?

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Pedagogical Objectives:
This case is designed to enable students:

  • Understand the basic concepts and terminology associated with vanilla derivative products e.g. forwards, futures, and options.
  • Reinforce the importance of the difference between the forwards/ futures and options which has important implications for how corporations and investors should use derivatives.
  • Discuss other concepts like option writer, option premium, leveraged position, and American and European options and underlying assets.
  • Understand the application of futures, forwards, and options in managing financial risk.

    Keywords : Derivative, Hedging,Currency Derivative, Futures, Forwards, Options, Financial Risk Management, Call Option, Put Option American option, European option, Strike Price, Lot Size,Currency Risk, Option premium

    Contents :
    » THE KNITWEAR CAPITAL OF INDIA
    » CHALLENGES BEFORE ARMISTRONG
    » WAY OUT
    » EXHIBITS


    Case Introduction >>


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