Aspen Technologies Case Questions: 1. Identify Aspen Technologies main exchange rate exposures. Explain how Aspen Technologies’ business strategy gives rise to these exposures as well as to the firm’s financing needs. 2. Calculate Aspen’s exposure for th

Aspen Technologies Case Questions:

1. Identify Aspen Technologies main exchange rate exposures.  Explain how Aspen Technologies’ business strategy gives rise to these exposures as well as to the firm’s financing needs.
2. Calculate Aspen’s exposure for the past year.  Identify whether the firm is long or short for each currency exposure.
3. Recommend a currency risk management program for Aspen Technology.

The case:

Aspen Technology.pdf

The Excel file:

Aspen technology.xls

Aspen Technology, Inc.:

Currency Hedging Review

In October 1995, Mary Palermo, senior vice president and chief financial officer of Aspen

Technology, Inc. (AspenTech), was reviewing her notes from a recent meeting at which a number of

new currency hedging techniques had been presented. While some of the ideas that had been

discussed were intriguing to Palermo, she knew that these choices could only be made in a broader

context. AspenTech, with headquarters in Cambridge, Massachusetts, developed and marketed

simulation software for customers in process manufacturing industries in over 30 countries. In 1995,

52% of AspenTech’s software license revenues came from customers outside the United States. With

most, but not all, of its expenses incurred in the United States, and a material fraction of its sales

abroad in yen, pound sterling, and DM, AspenTech had long been exposed to currency fluctuations.

Through a disciplined currency hedging program, it chose to eliminate virtually all of the exposure

arising from its global sales…………………