fin/371 initial public offering team assignment

1. Initial Public Offerings
Ron Call, Jessica Cutcher, Marva Thompson, Jeanie Worden, Liz Melius
FIN/370
October 19, 2015
Cheryl Health

2. Mitigating Foreign Exchange Risks
There are risks involved whenever an organization or business chooses to enlist in
international financing activities. One of the areas of risk is the currency exchange rates due to
the rate fluctuating compared to the U.S. Dollar. There are ways to minimize the risks of the
Foreign Exchange activities. For example, loan which are considered “Hard Currency Loans” are
important for financing microfinance institutions or MFI’s. These particular loans may appear to
be low in cost and a good way to fund the organization. Although these loans are cost-effective,
they hold the risk of the Foreign Exchange. When a MFI accrues debt in a Foreign Exchange,
whether it be U.S. Dollars or Euros, the MFI can suffer major losses (Cleary, Gottlieb, Steen &
Hamilton, and LLP 2006).
There are ways to hedge the risk such as forwarding the contracts so that they hold the
price. There are options to sell or exchange an amount of foreign currency now then re-sell in
the future.
Conclusion
An Initial Public Offering or IPO is a company’s first sale of stock to the public, also
referred to as capitalism. ISP makes stock available to the public in an attempt to help an
organization to become successful. It is a risky move for the business and can cause the failure
of an organization. When a business wants to take their organization public with IPS’s they must
take into consideration all the risks involved and make well informed decisions.

3. References
Cleary, Gottlieb, Steen & Hamilton, LLP (2006) Foreign Exchange Risk Mitigation
Techniques Structure and Documentation A Technical Guide for Microfinance
Institutions
Retrieved from: http://www.cgap.org/sites/default/files/CGAP-Technical-Guide-Foreign-
Exchange-Risk-Mitigation-Techniques-Structure-and-Documentation-Oct-2006.pdf