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Kodak, A US company, has sales in Germany in Euro. Please specify which of the following...

Kodak, A US company, has sales in Germany in Euro. Please specify which of the following actions will help it reduce its foreign currency exposure:

  1. Kodak shifts production costs from USA to Germany.
  2. Kodak shifts production costs from Germany to USA.
  3. Kodak buys Euro forward against the USD.
  4. Kodak buys USD forward against the Euro.
  5. Kodak borrows in Euro.
  6. Kodak borrows in USD.
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Answer #1

The kodak company can decrease its foreign currency risk by decreasing its Transactional Exposure by moving from the USA to Germany.

As € is receivable to Kodak.
Through a forward hedge by buying Euro forward against the USD.

As € is receivable to Kodak.
Through Money Market Hedge by Borrowing in Foreign currency that is by Borrowing in Euro.

Answer: a, c, e.

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