You have examined various types of derivatives that firms can utilize for the purpose of transferring risk. In this question, you will need to evaluate different scenarios and

explain which types of derivatives would be most appropriate. Given the possible locations, corporate structures, and risk types outlined below,

identify three scenarios and analyze the type of derivative product that best fits the

situation.  Location A developing

Area-Example: Africa

Corporate

Structure Type of Risk Transferred A standalone

firm Foreign Exchange Risk A developed

Area- Example: Europe

A major Operating subsidiary

Interest Rate risk An area that is both developed and continues to

develop- Example: Asia A medium-sized entrepreneurial

endeavor Operational delivery between countries

As an example, you might want to analyze a standalone (corporate structure) manufacturing European (location) company that exports to the US and wants to hedge foreign exchange (FOREX) risk (type of risk). What type of derivative product would

best fit this scenario? Why? Identify three scenarios similar to the above example and provide a detailed response for each that recommends a derivative and explains why

that type might be the most appropriate.