Merton Electronics Corporation

In February 1996, Merton Electronics was reviewing its currency risk position. Its principal foreign suppliers were Japanese and fluctuations of the dollar/yen exchange rate during the past 2-3 years seemed to have had a serious impact on costs and earnings.

The case raises many of the typical issues facing exporters, importers and others active in international trade. The case also gives students exposure to understanding foreign exchange, futures, and options market information appearing in the financial press. Finally the question of whether or not currency movements can be forecast is brought up.