Currency hedging requires a policy first

Article Abstract:

The hedging experience of Watkins-Johnson shows how a hedging policy is needed before implementing a hedging program. In trying to cover the sale of semiconductor equipment for $1 million to $2 million and the 18-month revenue cycle from quote to collection, the firm decided to use forward contracts in hedging. Despite having conducted a benchmarking study for data in managing the hedging portfolio, the program still met with some hurdles, including gathering the exposure information, calculating the exposure positions and doing the hedging and gauging the success of the program.

Methods, Management, Column, Portfolio management, Hedging (Finance)

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Transaction costs and networks

Article Abstract:

J. Carlos Jarillo's research on industrial networks demonstrated the importance of carefully selecting analysis techniques when studying networks. Jarillo's research did not take into account several problems related to transaction costs. Researchers should determine three factors: the perspective from which transaction costs are being observed, the ability of transaction cost theory to decompose costs, and the conditions under which transacting parties will bear the costs.

Research, Analysis, Costs, Industrial, Industrial costs, Business literature, Jarillo, J. Carlos

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IRS Scrutinizes intracompany currency transfers

Article Abstract:

The Internal Revenue Service is looking closely at the issue of intracompany currency transfers as concern exists that transfers which have no significant business purpose are occurring. The impact of a change to Section 987 of their code is discussed.

Laws, regulations and rules, United States. Internal Revenue Service, Money transfer

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