Porsche Relies on Currency Hedging Rather Than Price Increases to Boost

question 58

Essay

Porsche relies on currency hedging rather than price increases to boost pretax profits on sales of its automobiles. What is the advantage of doing this, and how does hedging work?

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Definitions:

Rupees

The official currency of India, also used as currency in other South Asian countries, identifiable by the symbol ₹.

Appreciated

In finance, refers to an increase in the value of an asset over time.

Foreign Assets

Assets such as securities, currencies, and commodities held by a country or individual in foreign countries.

Foreign Goods

Products and services that are produced abroad and imported for domestic consumption.