Hedging the Economic Exposure
Tim Cook remains concerned about his exposure to exchange rate risk. Even if Tim hedges his transactions from 1 month to another, he recognizes that a long-term trend of depreciation in the British pound could have a severe impact on this firm. He believes that he must continue to focus on the British market for selling his footballs. However he plans to consider various ways in which he can reduce his economic exposure. At the current time, he obtains material from a local manufacturer and uses a