- To identify the specificfinancial riskexposures faced by American Airlines (please limit the financial risks to what is taught in this unit). In this section, youMUSTdiscuss the outlook (forecast) for each underlying variable and identify whether it will present a risk to the firm. You need to provide adequate evidence to support the justification for your responses.(15%).
- (b) Make firm recommendations on whether to hedge all, part or none of the financial risk exposures that you identified in part (a) above. YouMUSTprovide some explanation for each of your recommendations. (i.e. the reasons for suggesting this strategy. (You are not required to specify the type of derivative to be used to hedge in response to this question).(10%)
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