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									Suggested Format for Case Analyses:

1. Executive Summary: brief 1 paragraph stating key problem(s) and your main

2. Problem Identification: 1-2 page write-up of the key problem(s) you have identified
within the case. This should not be a re-hash of the case itself. The Case Study questions
should help you address the issues in this section.

3. Action Plan: 1-2 page write-up of your proposed solution to the problem(s) with
detailed steps as to how to proceed with implementing your proposal.

4. Financial Analysis: 1-2 page write-up of the financial analysis that supports the
recommendation(s) you have presented in the Executive Summary and Action Plan. Use
an electronic spreadsheet to do the calculations and print out these figures as an
attachment to your case analysis.

Case Study Questions:

Tiffany & Co.—1993:
    1. Should Tiffany actively manage its yen-dollar exchange rate risk? Why or why
    2. If Tiffany were to manage its exchange rate risk activity, then what should be the
       objectives of such a program (e.g., what specific purpose or theoretical rationale
       can justify a decision to hedge the yen-dollar risk)?
    3. Assuming Tiffany wanted to hedge this risk, try to identify what exposures should
       be managed via such a hedging program (e.g., hedge sales, net income, cash flow,
       etc.). Also, try to quantify how much of these exposures should be covered and
       for how long.
    4. Identify, in terms of cost, benefits, and risk, the relative advantage / disadvantage
       of the following three hedging strategies: a) do nothing, b) hedge with forward or
       futures contracts, and c) hedge with option contracts.

Aspen Technology, Inc.: Currency Hedging Review (Mid-term Case and Group
   1. What are Aspen Technology’s main exchange rate exposures? How does the
       firm’s business strategy give rise to these exposures as well as to the firm’s
       financing need?
   2. What should be the goal of the firm’s currency risk management program (and
       why)? You can frame your answer to this question using the theoretical rationales
       for risk management discussed in class and found in Ch. 20 of the Smithson text.
   3. What hedging instrument(s), if any, would you recommend the firm use in order
       to achieve your recommended risk management goal?
Arundel Partners:
   1. First, read the HBS Tutorials and then read the Arundel case to answer these and
      the following questions: Why do the principals of Arundel Partners think they
      can make money buying movie sequel rights? Why do the partners want to buy a
      portfolio of rights in advance rather than negotiating film-by-film to buy them?
   2. Estimate the per-film value of a portfolio of sequel rights such as Arundel
      proposes to buy. [There are several ways to approach this problem, all of which
      require some part of the data set in Exhibits 6-9. You may find it helpful to
      consult the Appendix, which explains how these figures were prepared.] You can
      use either DCF, real options, or both valuation techniques to answer this question.
   3. What are the primary advantages and disadvantages of the approach you took to
      valuing the rights? What further assistance or data would you require to refine
      your estimate of the rights’ value?

Phelps Dodge Corporation (Final Case Analysis):
   1. Are the proponents of diversification for Phelps Dodge justified in their desire to
       moderate the impact of copper price volatility on the company’s performance? Is
       the reduction of commodity price risk a proper objective for management to
   2. Is corporate diversification a good way for the firm to manage its risks associated
       with copper price movements? What other steps could be taken to reduce these
       risks? What are their advantages and disadvantages of these alternative ways of
       managing copper price risk?
   3. As an equity investor in 1984, would you be willing to pay more, less, or just the
       same for Phelps Dodge’s stock if it announced a diversification program
       (assuming it paid fair value for the non-copper assets it acquired)? You can frame
       your answer to this question using the theoretical rationales for risk management
       discussed in class and found in Ch. 20 of the Smithson text.
   4. What would you recommend Phelps Dodge do?

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