Why is Cummins (CMI) stock price so volitale?
In a nutshell- The Company is exposed to financial risk resulting from volatility in foreign exchange rates, interest rates and commodity prices. Here are some excerpts from EDGAR’s initial 199910 K/A report for Cummins- Market Risk: The Company is exposed to financial risk resulting from volatility in foreign exchange rates, interest rates and commodity prices. This risk is closely monitored and managed through the use of financial derivative contracts. As clearly stated in the Company’s policies and procedures, financial derivatives are used expressly for hedging purposes, and under no circumstances are they used for speculating or for trading. Transactions are entered into only with banking institutions with strong credit ratings, and thus the credit risk associated with these contracts is considered immaterial. Hedging program results and status are reported to senior management on a monthly and quarterly basis. The following section describes the Company’s risk exposures and provi
