Case | HBS Case Collection | September 2004 (Revised February 2007)

Hedging Currency Risks at AIFS

by Mihir A. Desai, Vincent Dessain and Anders Sjoman


The American Institute for Foreign Studies (AIFS) organizes study abroad programs and cultural exchanges for American students. The firm's revenues are mainly in U.S. dollars, but most of its costs are in eurodollars and British pounds. The company's controllers review the hedging activities of AIFS. AIFS has a hedging policy, but the controllers want to review the percentage of exposure that is covered and the use of forward contracts and options. AIFS sets guaranteed prices for its exchanges and tours a year in advance, before its final sales figures are known. The controllers need to ensure that the company adequately hedges its foreign exchange exposure and achieves an appropriate balance between forward contracts and currency options. To obtain executable spreadsheets (courseware), please contact our customer service department at

Keywords: Foreign Direct Investment; Investment Funds; Financial Strategy; Forecasting and Prediction; Revenue; Credit Derivatives and Swaps; Currency; Currency Exchange Rate; Education Industry; North and Central America;


Desai, Mihir A., Vincent Dessain, and Anders Sjoman. "Hedging Currency Risks at AIFS." Harvard Business School Case 205-026, September 2004. (Revised February 2007.)