• Understand the history, functioning and use of FX markets.
• Understand how exchange rates affect MNEs and SMEs on different levels.
• Assess and measure the effect of different exposures and come up with appropriate risk management processes.
• Manage the different exposures using contractual, strategic or financial instruments.
• Combine different options to create synthetic positions.
• Calculate outcomes of different hedging instruments in EXCEL using actual CME quotes.

The course is designed as an undergraduate course of International Financial Management with a distinctive focus on operational corporate risk management. As a consequence, option valuation is not addressed in detail. The course is unique in that students use actual CME quotes and contracts to calculate hedging strategies. Students are gently acquainted with combined option hedges (i.e., ratio-forward, zylinder, zero cost vertical spread) that are not covered in standard undergraduate courses. Strategies are calculated in class using EXCEL and intensively discussed to assure ease of understanding.

Classes 1-5 examine the financial markets environment. Students are introduced to a broad set of instruments (internal and external) to manage currency risks and then move on to cover the basic theoretical concepts of foreign exchange rate exposure (accounting exposure, transaction exposure and economic exposure) and the hedging process in companies. For the Preliminary Assignment students sit an online exam on the LEARN platform, covering all preparation materials including a BBC podcast featuring Milton Friedman presenting his seminal 1971 article on “The Need for Futures Markets in Currencies”, reading a white paper on financial derivatives markets by Deutsche Börse AG and reading an introductory chapter (Chapter 4) from Madura (2011) on exchange rate determination.

Classes 6-10 are interactive and based on the Online Script provided by the lecturer. Students analyze and calculate hedging instruments on an operational treasury level. Option strategies are taught using actual CME quotes and contracts. Strategies are calculated and discussed extensively in class using EXCEL. The Mandatory Mid-term assignment in Class 6 is an online home exam using the LEARN Plattform and covers all course content of Classes 1-5. The Comprehensive Review covers both theoretical foundations and hedging strategies.

Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 1 in order to 'jump-start' the learning process.

The timetable is available on http://www.cbs.dk/uddannelse/summer-university-programme/courses.

Preliminary Assignment preparation material: A compendium will be uploaded to LEARN including all materials except the primary textbook.                                             Milton Friedman (1971). The need for futures markets in currencies. In: Cato Journal, 31(3): 635-641.                                                                                                                                                                   Milton Friedman & Leo Melamed (2010). Confidence to act - A brief history of FX Futures. Chicago Mercantile Exchange; Chicago. (30-minute podcast).                                                                   

Deutsche Börse Group (2008). The Global Derivatives Market: An introduction. White Paper; Frankfurt am Main. pp. 1-44.                                                       

Jeff Madura & Roland Fox (2011). International financial management. [European Ed.], 2nd Edition, South-Western Cengage Learning; Andover, Chapter 4 (pp. 113-133).

Primary textbook for foundations: Jeff Madura & Roland Fox. International financial management. [European Ed.], 3rd version ISBN: 9781408088456, South-Western Cengage Learning; Andover (Chapters 5-12; pp.134-440) Students can acquire the relevant chapters or the full book on Cengage Brain. Note: the course will only cover the chapters mentioned and some further topics. It is therefore not essential to purchase the book if you attend all classes.   http://www.cengagebrain.co.uk/shop/isbn/9781844803606A                                                               

An online course script and lecture slides will be provided (approx. 150 slides) on LEARN.

Additional reference material for option calculations: Gordon Bodnar. Techniques for managing exchange rate exposure. Class note, University of Pensylvania. (pp.1-14).                               

Online Course Script provided and lecture slides (approx. 100 slides) on LEARN.

Additional cases used: S. L. Srinivasulu (1981). Strategic Response to Foreign Exchange Risks. In: Columbia Journal of World Business, 16 (1): 13-24.       

Kathryn Tully (2004). Car companies face currency quandary. Market Monitor; Euromoney Institutional Investor; London, pp.1-4.