Poland’s A2 Motorway Case Study Help
Question 5: For example, when is it appropriate to prevent, hedge, insure, allocate, or bear particular risks?
The appropriate time to hedge the risk is when the market indicator shows that infuture the interest rate or currency rate will increase. At this time, hedging will help to mitigate the risk and they will be able to generate more returns.
They can also pursue the option of mitigating the currency risk. They can pursue options for raw material purchase. Instead of buying currency options they can purchase options for raw material. Raw material options will help them, if the prices of raw material go up, they will still buy at an agreed price.
Appendices
Appendix 1: Risks
Political Risk | Market Risk |
Unsustainability | Difficult to forecast |
Currency Risk | Interest Rate Risk |
Increase in Spread | Fluctuation |
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