The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase. The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings. Characters in the case: Company AP Person TC To discuss: The reason why the strong Country U’s dollar has a negative impact on AP Company’s earnings.

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Answer 1

Question

Chapter 10, Problem 1CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the strong Country U’s dollar has a negative impact on AP Company’s earnings.

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Answer 2

Question

Chapter 10, Problem 1CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the strong Country U’s dollar has a negative impact on AP Company’s earnings.

Expert Solution & Answer

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Answer 3

Question

Chapter 10, Problem 1CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the strong Country U’s dollar has a negative impact on AP Company’s earnings.

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Answer 4

Question

Chapter 10, Problem 1CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the strong Country U’s dollar has a negative impact on AP Company’s earnings.

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Answer 5

Chapter 10, Problem 1CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the strong Country U’s dollar has a negative impact on AP Company’s earnings.

Answer 6

Chapter 10, Problem 1CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the strong Country U’s dollar has a negative impact on AP Company’s earnings.

Answer 7

Chapter 10, Problem 1CDQ

Summary Introduction

Case summary:

The Person TC (Chief Executive officer of AP Company) has reported a loss of $5 billion in their revenue during the fourth quarter of 2016. This loss in the Company’s revenue was due to exchange rates changes. The impact on the company was significant, because the company’s revenue has reduced by 2% from an 8% increase.

The AP Company was engaged very much in hedging to protect from the foreign exchanges fluctuations. However, the appreciation of the dollar is much faster than forecasted so the company’s hedging activity has been unsatisfactory in order to protect the value of its overseas earnings.

Characters in the case:

Company AP

Person TC

To discuss: The reason why the strong Country U’s dollar has a negative impact on AP Company’s earnings.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 10.5 - Prob. 1DYK Ch. 10 - Prob. 1CTD Ch. 10 - Prob. 2CTD Ch. 10 - Prob. 3CTD Ch. 10 - Prob. 4CTD Ch. 10 - Prob. 5CTD Ch. 10 - Prob. 1CDQ Ch. 10 - Prob. 2CDQ Ch. 10 - Prob. 3CDQ Ch. 10 - Prob. 4CDQ

Solution Summary: The author explains that the AP Company reported a loss of 5 billion in their revenue during the fourth quarter of 2016 due to exchange rates changes.

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Chapter 10 Solutions