Why did the strong U.S. dollar during 2015 have a negative impact on Apple’s earnings?

The Foreign Exchange Market Chapter

Case Discussion Questions

1. Why did the strong U.S. dollar during 2015 have a negative impact on Apple’s earnings?

2. Why did Apple not fully hedge its foreign ex- change exposure to avoid a hit on earnings?

3. Why was the U.S. dollar so strong during the 2014–2016 period? Was the strength in the dollar a rational response to economic fundamentals?

4. Under what conditions do you think the U.S. dollar might weaken against other major currencies (e.g., the euro, yen and yuan?

5. How would a fall in the value of the U.S. dollar against other major currencies impact Apple?

6. Some companies do not hedge their foreign ex- change exposure? Do you think Apple is correct to hedge? Why?