Notes On Vanilla Interest Rate Swaps

Procter and Gamble Co. also know as P&G, is an American multinational consumer goods company, founded by William Procter and James Gamble. Its products include cleaning agents and personal care products. It has in its kitty global brands such as Ariel and Tide in the Fabric care segments and Head & Shoulder, Pantene and Rejoice is the Hair care segment. For this case study selects P&G Company as it has an important role in the consumer segment products. As P&G was a popular company, the financials statement shows better performance in the previous year.

Hedging is a significant measure of financial risk management. Since the 1970s, the increasing number of powerful companies started to control the risk of the exchange rate, the interest rate and commodity by using financial derivatives. ISDA (2013) based on the Global 500 Annual Report 2012 survey found that 88 percent of companies use foreign exchange derivatives. Modigliani & Miller (1958) believed that if the financial markets were under perfect conditions, for instance, there was no agency costs, asymmetric information, taxes and transaction costs, hedging would not increase the company 's value because investors can hedge by themselves. However, a large number of practical studies have shown that hedging is beneficial

Procter & Gamble Co is an American global consumer goods company. P&G have various products that range from personal hygiene products to household products.

Pacific Gas and Electric Company (PG & E) entered into a contract with Placer County Water Agency (Agency) to purchase hydroelectric power generated by Agency’s Middle Fork American River Project. The contract was not terminable until 2013. As energy prices rose during the 1970s, the contract became extremely valuable to PG & E. The price PG & E paid for energy under the contract was much lower than the cost of energy from other sources. Ten year later, Bear Stearns & Company (Bear Stearns), an investment bank and securities underwriting firm, learned of Agency’s power contract with PG & E. Bear Stearns offered to assist Agency in an effort to terminate the power contract with PG & E in exchange for a share of Agency’s subsequent profits and the right to underwrite any new securities issued by Agency. Bear Stearns also agreed to pay the legal fees incurred by Agency in litigation concerning the attempt to get out of the PG &

* Unrealized loss/gain on derivative instruments Operating derivatives is not a core activity of the company. (These are used to hedge and diminish potential risks)

Procter & Gamble has wide global exposure. Its products are sold in 180 countries through wide-ranging distribution channels including mass merchandisers and grocery stores.

Procter & Gamble (P&G) is a Fortune 500 American multinational company, and a world 's leading consumer goods company. P&G’s work is driven by a Purpose of providing branded products and services of superior quality and value to improve the lives of the world’s consumers now and for generations to come. P&G now has 50 Leadership Brands, which are among the world 's best known and which account for more than 90% of P&G sales. P&G entered the Chinese market through a joint venture in 1988. Now, P&G is the most successful foreign marketer in China as measured by market share.

In addition, it owns and operates 93 manufacturing facilities in 45 other countries” (2). With such a huge, world-wide customer base, P & G has the challenge of meeting the needs of millions of people. To do so, the company has to constantly update its product line and expand is operations, increase it to answer new consumer demands. The question is then, is P & G capable of doing so?

Analyze the derivatives market and determine the use of derivatives to efficiently manage investment risks in an investment portfolio.

  P&G originally operated in the US in the form of product division management in order to facilitate nationwide brands.

product segments – Oral, Personal and Home Care; and Pet Nutrition. The company operates in more than 200 countries and this geographic diversity and balance help to reduce the Company’s exposure to businesses and other risks in any one country or part of the world. The company’s main competitors are Proctor & Gamble (PG), Johnson & Johnson (JNJ), Church Dwight & Company (CHD) and Clorox & Company (CLX).

P&G is the world 's largest consumer goods company that markets more than 300 brands in over 180 countries. Many of its products are non-discretionary; however, some are considered premium purchases and their sales suffered during the recession as cheaper, generic purchases rose. P&G has some of the strongest brands in the world that usually provide it a significant competitve advantage. It cut prices up to 10% on a wide swath of products to blunt any potential loss of market share. Below is a summary of the company 's competitive position.

As a result, the relative financial health of these entities emerge as one reasonably ascertained by examining a variety of historical financial statements reported to the federal government, stockholders of record and the public at large. Official 10Ks submitted to the SEC help formulate the backbone of the company’s financial performance. And while alternative sources like a company’s annual report contain the same fundamental information, the derivatives hail from the same 10K. Although not difficult to comprehend, those with limited knowledge will require some basic understanding of corporate finance to establish a reasonable picture of the company’s fiscal health. Fortunately, wealth of free information now serves as guidance and commonly exists all across the Internet from online brokerages and financial self-help websites just to name a few.

P&G is a multinational Organization of consumer goods situated in United States. It sells products like personal care, cleaning agents, pet foods. The P&G Company is well known for its unique strategy which cares about the need of human. It not only makes its product available to its consumers but also tries to improve the life of its consumers. This strategy is more focus on its consumers wants and that is why it has an appeal to the heart of the consumer. The company has diversified its product line and also acquired other companies which have significantly contributed in the growth of their profitability.

Procter & Gamble (P&G) is a world-leading producer of consumer goods. Today, it consists of over 20 million dollar brands (like Gillette) and operates in 42 countries