• How does Porsche hedge its foreign exchange risk? How do Porsche’s competitors deal with this risk?
• Why does Porsche hedge its foreign exchange exposure? Does it make sense, from the perspective of shareholders, for Porsche to hedge by assuming markets without any frictions (i.e., the Modigliani-Miller theorem holds)?
• Does it make sense, from the perspective of shareholders, for Porsche to hedge by assuming markets with frictions? Does Porsche’s ownership structure imply special considerations for hedging policies?
• Based on your analysis of question 3, what is the best hedging strategy for Porsche? Based on your analysis, discuss the foreign exchange hedging strategy and the hedging instruments chosen by Porsche. If you were Porsche’s CEO, which hedging strategy would you implement? Why?