MT433 Unit 5 Currency Exposure Brief Example

Course	MT433 Global Supply Chain Management
Unit	Unit 5
Paper type	Currency exposure brief
Length	About 590 words, 5 pages double-spaced
Format	APA 7 student paper
School	Purdue University Global
Program	BS in Business Administration
Updated	October 2026

Free sample paper for MT433 Unit 5

Euro Costs, Dollar Price: An MT433 Unit 5 Currency Exposure Brief for a Premium Towel Line

[Student Name]

Purdue University Global

MT433: Global Supply Chain Management

Unit 5 Currency Exposure Brief

[Instructor Name]

[Date]

Catawba Linen Supply, the Guimaraes mill, the hotel contract and every rate are composite scenarios, not forecasts; the sources cited are real.

What this part is doingStating which side of the exchange rate hurts in the lead answers the question graders check first.

The Exposure in One Line

Catawba owes about 348,000 euros a year to a towel mill in Guimaraes, Portugal, for 60,000 premium towels at 5.80 euros each, payable 60 days after shipment, while it sells those towels to a hotel group at a fixed $12.40 under a two-year dollar contract. Costs move with the euro; revenue does not.

Which Way It Cuts

Catawba is buying euros. If the dollar weakens, each euro costs more dollars and the margin shrinks. A stronger dollar helps. The exposure runs for as long as the hotel price is fixed and the mill invoices in euros.

Sensitivity

Landed cost converts the 5.80-euro price at each exchange rate, adds freight, fees and duty at an all-in 15 percent of the converted value and then $0.22 a towel of fixed handling. Duty rises with the converted value, so a weaker dollar raises the duty bill as well as the invoice.

At 1.04 dollars per euro, landed cost is $7.16, margin $5.24 a towel and annual margin about $314,592. At 1.16, landed cost is $7.96, margin $4.44 and annual margin about $266,568. At 1.24, landed cost is $8.49, margin $3.91, or 31.5 percent of the price, and annual margin about $234,552.

The company's floor is a 30 percent margin on any contract line. It breaks at about 1.268 dollars per euro, roughly 9 percent above the 1.16 midpoint scenario.

Every cent the euro gains costs Catawba about $4,000 a year on this line, and nothing in the hotel contract lets it pass that on.

What this part is doingReducing the exposure to a single per-cent figure gives the owner a number to remember.

Four Responses

Forward contracts would fix the dollar cost of each payment in advance. Covering 75 percent of the next twelve months of payables, in layers that match the mill's invoice dates, would lock most of the margin while leaving some room if volumes change. The forward rate will sit slightly above spot when dollar interest rates exceed euro rates, a cost of roughly one to two cents per euro a year, but no premium is paid up front.

Dollar invoicing would move the risk to the mill. The mill would likely add a margin for carrying it, and would want to reset the price at each renewal, so the exposure returns at renewal.

A currency adjustment clause in the next hotel contract would let Catawba pass part of a large euro move through to the hotel. It does nothing for the current contract.

Currency options or a collar would cap the cost while keeping some upside, at the price of an up-front premium or a limit on the gain.

Recommendation

Catawba should cover 75 percent of the next twelve months of euro payables with layered forward contracts now, review the cover each quarter, and seek a currency adjustment clause when the hotel contract is renewed. Froot et al. (1993) made the case that a firm should hedge when swings in its cash would force it to cut spending it has planned, and a fixed-price contract with a margin floor is exactly that situation. Bartram et al. (2010) found that firms' measured currency exposure is often small because they pass costs through and hedge; Catawba can do neither on this contract without acting.

What this part is doingTying the recommendation to the fixed-price contract shows why hedging fits this line rather than every line.

References

Bartram, S. M., Brown, G. W., & Minton, B. A. (2010). Resolving the exposure puzzle: The many facets of exchange rate exposure. Journal of Financial Economics, 95(2), 148-173. https://doi.org/10.1016/j.jfineco.2009.09.002

Froot, K. A., Scharfstein, D. S., & Stein, J. C. (1993). Risk management: Coordinating corporate investment and financing policies. Journal of Finance, 48(5), 1629-1658. https://doi.org/10.1111/j.1540-6261.1993.tb05123.x

Reading the MT 433 Unit 5 instructions

MT433 Unit 5 calls for a two-page currency brief: how a company's costs or revenue move with exchange rates, and what it should do about it. Instructors expect the exposure stated precisely: which invoices, in which currency, for what amount and over what period, and whether the company is hurt by a stronger or weaker home currency. A buyer paying in a foreign currency is hurt when its own currency weakens, and reversing that direction is marked down sharply. A sensitivity table at several exchange rates should show cost and margin in dollars, including second-order effects such as duty rising with converted value. Responses should be compared on cost and on what each leaves exposed. It should close on a recommendation fitted to the contract and phrased for an owner who has never placed a forward trade.

How this MT433 Unit 5 example is built

The sample opens with the exposure in one sentence and then states which way it cuts. The sensitivity section converts the euro price at three rates, adds the all-in cost and fixed handling, and reports landed cost, margin per towel and annual margin, noting where the margin floor breaks. A highlighted line turns the exposure into a dollar figure per cent of euro movement. Four responses follow, each with its cost and its gap: layered forwards, dollar invoicing, a currency clause in the next hotel contract and options. The recommendation chooses layered forwards on three quarters of the payables, citing Froot and colleagues on when hedging adds value and Bartram and colleagues on why many firms show little measured exposure.

MT433 Unit 5 rubric: what earns full points

Currency briefs give up ground when they describe exchange rates in general and never state which invoices are exposed, in which direction and for how long. Prompts in this course usually test whether the writer saw that a buyer paying euros is hurt by a weaker dollar. Rubrics check for the second-order effect on duty, which rises with converted value. Credit goes to a sensitivity table in dollars with a clear breakpoint. Responses listed without prices, or a forward recommendation with no mention of what it costs, lose analysis marks. Matching the response to the contract, here a fixed price with a margin floor, shows judgment. A summary box an owner can read in a minute and cited sources complete the expectations.

MT433 Unit 5 help: mistakes that cost points

The most common weak currency brief explains what exchange rates are and lists hedging tools from a glossary. Another frequent error gets the direction wrong, saying the importer gains if the dollar weakens. Students often leave out the effect on duty and freight, which rise with the converted value. Hedging is commonly recommended without a cost or a share to cover. Some briefs recommend hedging all exposure, though volumes may change. Before submitting, recompute your margin at a rate ten cents worse than today and confirm the sign of the change. If the margin rises when the dollar weakens and the company buys in euros, the direction in your brief is reversed, and every recommendation built on it needs to be checked.

Get an MT433 Unit 5 example written to your instructions

Send the supplier's currency, price and payment terms as the Unit 5 case states them, plus whatever the buyer has promised its own customers, and the rubric. Within 24-48h a free first brief comes back showing margin at three dated rates, the trigger rate and every response priced against what it leaves open. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

More MT433 papers and BS in Business Administration samples

MT433 Unit 5 questions, answered

Which direction of exchange rate hurts an importer paying in euros?

A weaker dollar. When each euro costs more dollars, the same invoice converts to a larger dollar amount, and duty assessed on that value rises with it. A stronger dollar helps. Stating the direction plainly at the top of the brief avoids a frequent error in these papers, describing the exporter's exposure instead of the importer's.

Why not simply ask the supplier to invoice in dollars?

Because the risk does not vanish; it moves to the supplier, whose costs stay in euros, and the supplier usually prices it back in. The example's mill agrees to dollar invoicing at a three percent premium, about twelve thousand dollars a year, far more than forward cover would cost. Dollar invoicing makes sense when that premium is small or volumes are too irregular to hedge.

How much of the exposure should be hedged?

The share that is committed and certain, with a smaller share hedged on forecasts. The example covers three-quarters of committed orders because the hotel price is fixed, leaving the rest open in case volumes change. Covering forecast purchases in full can leave a buyer holding forward contracts for towels it never orders, which turns a hedge into a speculation.

Where can I find a free MT433 Unit 5 sample paper?

You can read the whole MT433 Unit 5 brief here, measuring a towel importer's euro exposure under a fixed dollar contract and pricing four responses.

At what exchange rate does the MT433 Unit 5 sample margin floor break?

At about 1.268 dollars per euro, roughly 9 percent above the 1.16 midpoint, the premium line falls below the 30 percent margin floor.