In year 2007, an analyst in derivatives group of investment bank Grenfeld & Co. was asked to formulate a hedging strategy for Providence Equity Partners (Providence) in Bell Canada Enterprises (BCE Inc.). Providence was based in the USA and any strategy would entail substantial foreign exchange rate risk due to the conversion of returns into U.S. dollars.
Leveraged Buyout (LBO) of BCE Hedging Security Risk Case Study Solution
The analyst needed to consider several long-term hedging strategies that Grenfeld & Co. could advocate to Providence. Her vice president had requested that she create a hedging strategy by initially assuming a 25 per cent IRR for the investment and its functionality, based on two outcomes at the end of the investment (investment horizon = five years): a zero per cent IRR and a 25 per cent IRR.
PUBLICATION DATE: January 06, 2009 PRODUCT #: 908N23-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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