Questions Answered in the Disney Yen Financing case
1. Should Disney hedge its yen royalty cash flow? Why or
why not? If so, how much should be hedged and over what
2. Assuming a hedge is desirable what hedging
techniques available to the treasure? What are the
advantages and disadvantages of each?
3. In light of the various other techniques for hedging currency
exposures why the market for currency swap does exists?
Who benefits and who looses in such an agreement? Can a
swap really create value for a corporation? And if so where
does the value come from? What risks does the swap carry for
the various parties involved?
4. Evaluate Goldman’s proposal for an ECU bond issue
accompanied by ECU/Yen swap. How does it “all-in” yen cost
compare to that of the proposed yen term loan? Is it super to
hedge in outright forwards?
|The Walt Disney Company's Yen
Financing, Harvard Case Study (HBS)
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