CASE HARVARD: Walt Disney Company: Financing in Yen (1)

1. Should Disney cover its cash flow in Yen? Why? How much should be covered and for how long?
2. Assuming coverage is desirable, what coverage techniques are available to the treasurer and what are the major advantages and disadvantages of each?
3. In light of the existence of various currency hedging techniques, why does the swap market exist? Who benefited and who lost in such agreements? Can a swap really create value for the company? Where does the value come from? What risks does the use of a swap involve for all parties involved?
4. Evaluated Goldman’s proposal for a euro bond issue accompanied by a euro / yen swap. How do you compare a proposal and “all included” in a yen term loan?

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