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2017/2018 BA-BHAAI1013U Undergraduate International Financial Management and Hedging
| English Title | |
| Undergraduate International Financial Management and Hedging |
Course information |
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| Language | English |
| Course ECTS | 7.5 ECTS |
| Type | Elective |
| Level | Bachelor |
| Duration | Summer |
| Start time of the course | Summer |
| Timetable | Course schedule will be posted at calendar.cbs.dk |
| Max. participants | 120 |
| Study board |
Study Board for BSc in Economics and Business
Administration
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| Course coordinator | |
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| In case of any academic questions related to the course, please contact the course instructor or the academic director, Sven Bislev at sb.msc@cbs.dk. | |
| Main academic disciplines | |
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| Last updated on 25/04/2018 | |
Relevant links |
| Learning objectives | ||||||||||||||||||||||
To achieve the grade 12, students should meet the
following learning objectives with no or only minor mistakes or
errors:
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| Course prerequisites | ||||||||||||||||||||||
| It is recommended that students have a very basic understanding of corporate finance instruments and financial markets, basic EXCEL skills and high school-level mathematics. | ||||||||||||||||||||||
| Examination | ||||||||||||||||||||||
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| Course content and structure | ||||||||||||||||||||||
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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) which are not covered in standard undergraduate courses. Strategies are calculated in class using EXCEL and intensively discussed to assure ease of understanding. Classes 1-6 examine the financial markets environment (Chapters 1-4). Students are introduced to a broad set of instruments (internal and external) to manage currency risks (Chapter 5-6) 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 (Chapters 7-12). Classes 7-11 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.
For the Preliminary Assignment in Class 1 students are required to complete three online courses -> Introduction to FX
and read textbook chapter 1 from Jeff Madura & Roland Fox (2011) and an article by Milton Friedman Leo Melamed (2010). These materials will form the basis of a 30 minute in class, pen and paper exercise.
Class 1: Preliminary assignment and introduction to financial
markets
Feedback activity: Students complete an online exercise at home covering the content of the first 6 classes. The answers are discussed in the following class in detail to provide feedback. Class 7: Feedback discussion and symmetrical instruments of
hedging (FRA, NDF, Money Market hedging)
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| Teaching methods | ||||||||||||||||||||||
| The first part of the course is lecture based to convey the necessary knowledge of financial management to students. The second part of the course is designed to calculate different types of hedging strategies in EXCEL. | ||||||||||||||||||||||
| Feedback during the teaching period | ||||||||||||||||||||||
| Students complete an online exercise at home covering the content of the first 6 classes. The answers are discussed in the following class in detail to provide feedback. | ||||||||||||||||||||||
| Student workload | ||||||||||||||||||||||
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| Further Information | ||||||||||||||||||||||
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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.
Course timetable is available on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams.
We reserve the right to cancel the course if we do not get enough applications. This will be communicated on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams end February 2018 at the latest. |
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| Expected literature | ||||||||||||||||||||||
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Mandatory readings:
Jeff Madura & Roland Fox (2011). International financial management. [European ed.], 2nd Edition, South-Western Cengage Learning; Andover [u.a.]. (Chapters 1-12) Students can acquire the relevant chapters or the full book on Cenage Brain. http://www.cengagebrain.co.uk/shop/isbn/9781844803606 (More recent editions of the book are available and can be used)
Additional relevant readings:
S. L..Srinivasulu (1981). Strategic Response to Foreign Exchange Risks. In: Columbia Journal of World Business, 16 (1): 13-24. (11 pages) Permanent link: http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=5546516&site=ehost-live Milton Friedman (1971). The need for futures markets in currencies. In: Cato Journal, 31 (3): 635 – 641 (6 pages). Permanent link: http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2011/9/cj31n3-15.pdf |
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