Holey Moley Guacamole! Understanding Foreign Currency Exposure

Abstract

[EN] International financial management refers to the investment and financing decisions that managers of a multinational company face in the international context that they engage in in business. Breuer and Ruiz de Vargas (2021) highlight the high demand for practical applications in this area. The purpose of the current work is to introduce undergraduate students to the concept of currency risk and hedging through a case study on currency risk of the firm Holey Moley Guacamole. Students analyze the benefits and drawbacks of different hedging alternatives for the firm’s operating currency exposure. The exercise here developed is geared towards the introduction of the topic of currency risk to undergraduate students in a finance cases class, upper level financial management class, or international financial management class. In addition to developing this exercise and implementing it in class, student learning is assessed.