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2015/2016  KAN-CCMVI2001U  Advanced International Financial Management and Hedging

English Title
Advanced International Financial Management and Hedging

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration Summer
Start time of the course Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Course instructor - Dr. Jakob Müllner, Vienna University of Economics and Business
    Patricia Plackett - MPP
Main academic disciplines
  • Finance
  • Globalization and international business
  • Strategy
Last updated on 10/08/2017
Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors:
  • Understand how exchange rates affect MNEs and SMEs on different levels.
  • Manage the different exposures using contractual, strategic or financial instruments.
  • Implement and analyze FX risk management processes in SMEs and MNEs.
  • Interpret outcomes of different hedging instruments including complex option strategies.
  • Address managerial elements in corporate hedging (exchange rate forecasting, strategic management of different exposures, measurement of foreign exchange exposure, hedging ratio, hedging tenor etc.).
  • Understand scientific and practical state-of-the-art papers on corporate hedging.
Course prerequisites
Students should have completed an introductory course of corporate finance.

Students need high school-level mathematical skills, a good level of English, a basic understanding of derivatives and necessary scientific competence to understand peer-reviewed journal articles.
Prerequisites for registering for the exam
Number of mandatory activities: 1
Compulsory assignments (assessed approved/not approved)
Mandatory Mid-term Assignment: The Mandatory Mid-term Assignment is a home assignment and involves a written discussion of a journal article.
Examination
Advanced international financial management and hedging:
Exam ECTS 7.5
Examination form Written sit-in exam
Individual or group exam Individual
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Summer
Aids allowed to bring to the exam Limited aids, see the list below:
  • Written sit-in-exam on CBS' computers
  • Allowed dictionaries
  • Additional allowed aids, please see the list below
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Description of the exam procedure

* Exam aids for 4-hour written exam: All Journal articles used in class will be included in the appendix of the final examination for reference.
Course content and structure

The course is an advanced graduate course in International Financial Management with a distinctive focus on managerial corporate risk management. The course is unique in that: it covers both operational implementation of hedging instruments and managerial issues in corporate hedging that typically are not included in standard courses. Students read, present and interactively discuss hand-picked state-of the art journal articles with highly practical implications.

 

For the Preliminary Assignment students are required to prepare for an online exam on the LEARN platform. The Exam covers all preparation materials: i.e. a textbook chapter from Hull (2012), a 65-minute online web seminar on “Understanding FX Markets” offered by the Chicago Mercantile Exchange (CME) and the accompanying audio transcript and slides.

 

Classes 1-5 are lecture based and will bring students to an advanced international financial management level by the Mid-Term Assignment. Topics include foreign exchange risk theory (accounting exposure, transaction exposure and economic exposure) (Chapters 9-12), exchange rate behavior (Chapters 4), knowledge of hedging instruments, the hedging process (net exposure assessment, forecasting and implementation of hedging strategy)(Chapter 5).

 

For the Mid-term Assignment students are assigned one of 10 journal articles and are required prepare a home assignment discussion paper. Papers should a) summarize the article, his methodology and findings, (b) connect the findings from the article to topics in the course (c) discuss the implications of the findings for practitioners and researchers (d) identify four more research article on the topic (e) summarize the main findings from their abstracts. Assignments are distributed to students and can serve as preparation material for the final exam. In classes 6-10 the 10 journal articles are discussed. Students read articles, present their discussion papers and engage in an interactive discussion.

 

The Comprehensive Review covers both contents from the lecture and the interactive discussions on the journal articles.

 

Class

Topic

Class 1

​Preliminary Assignment

Class 2

 Introduction into markets and the hedging process

Class 3

 Types of exchange rate exposures and hedging instruments

Class 4

 Organization of FOREX management

Class 5

 Hedging Instruments

Class 6

 Mandatory Mid-term Assignment

Class 7

 Foreign exchange forecasting theory and models

Class 8

 Types of Exposure and management

Class 9

 Economic exposure, measurement and management

Class 10

Organization of FOREX I

Class 11

Comprehensive Review
Teaching methods
The course starts with a home study assignment using an online webinar on “Understanding FX Markets” by the Chicago Mercantile Exchange (CME) and a textbook chapter which will also form the basis for the preliminary assignment.

Classes 1-5 are lecture format and aim at bringing students to an advanced level of International Finance and Hedging. Topics are illustrated using practical cases from 10 year experience and there is plenty of room for interactive discussion.

The focus in Classes 6-10 focus on managerial problems in corporate treasury. Sessions will involve student presentations and interactive discussions. Students read two journal articles prior to each session. Four students present one article and their discussion papers in class. This is followed by an interactive discussion and in depth analysis of the article. The Comprehensive Review covers the both textbook chapters from part one and the journal articles from part 2.
Further Information

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.
Expected literature

Primary textbook used for first part of the course: Jeff Madura & Roland Fox (2011). International financial management. [European ed.], 3rd version ISBN: 9781408088456, South-Western Cengage Learning; Andover [u.a.]. (Chapters 4, 5, 9-12 = 214 pages). Students can acquire the relevant chapters or the full book on Cengage Brain. http://www.cengagebrain.co.uk/shop/isbn/9781844803606

 

Note: the course will ONLY cover the chapters mentioned. Also, the course will go into a lot more detail on organizational issues of hedging. As a result, it is NOT essential to purchase the book if you attend all classes. In addition, an online course script and lecture slides will be provided (approx. 150 slides) on LEARN. Cases and journal articles will be used in second part of the course and will be uploaded on LEARN.
Last updated on 10/08/2017