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Broken Hill Proprietary Billiton report: Analysis Available Strategy to Hedging Risks by Using Futures Contracts, Foreign Exchange Futures

Author(s)

Mengdi Xiong

Affiliation(s)

Business School, Xi’an International University, Xi’an, Shaanxi, China

Abstract

With the development of multinational companies, plenty of companies confront enough problems in financial management. This paper using real figure analysis method to conclude companies financial problems. After data analysis, we found Broken Hill Proprietary Billiton as one of the multinational company, it faced enough problems as commodity price risk, currency exchange rate risk and interest rate risk. In this case, hedging strategies with derivatives are used to minimize the risks of financial loss. Futures contract can be used to deal with commodity price risk and risks of currency exchange risk by locking in price and reduce uncertainty of market movements. Finally, contrast advantages and disadvantages for each strategy. After analysis of Broken Hill Proprietary Billiton, it could provide enough strategies to alleviate financial risks for multinational companies.

Keywords

Broken Hill Proprietary Billiton; Commodity Price Risks; Currency Exchange Rate Risk; Interest Rate Risk; Strategies

References

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