Report on Foreign Exchange Risk Management Solutions-The Walt Disney Company’s Financing

Abstract

In order to solve special foreign exchange risk problems, this report takes Walt Disney Company as a typical example. It first collects global foreign exchange data in 1985 comprehensively, then discusses the advantages and disadvantages of ordinary hedging tools including forwards, futures, and options in financial risk management. What’s more, it also deeply analyzes the benefits of the special method of swap trading when foreign exchange risks occur, exploring how swap transactions can better match the long-term and complex risk exposure of enterprises. The study found that Goldman Sachs’ method, which involves issuing ten-year ECU euro bonds and converting them into yen liabilities through currency swaps, can effectively avoid the shortcomings of ordinary hedging tools. It not only successfully solves the problem of foreign exchange risks, but also provides a valuable reference for enterprises to face risk management in the future, especially for multinational companies dealing with cross-currency and long-term financial risks.