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2017/2018  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
Max. participants 60
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Course instructor - Associate Prof. Dr. Jakob Müllner, Vienna University of Economics and Business Administration, jmu.acc@cbs.dk
    Sven Bislev - Department of Management, Society and Communication (MSC)
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
  • Finance
  • Management
  • Strategy
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:
  • Understand how financial markets work and can be used for risk management
  • Identify and evaluate different types of risk in international business
  • Devise financial strategies to manage or hedge risks international business
  • Understand how exchange rates affect companies on different level
  • Be able to implement and analyze risk management processes
  • Be able to deal with managerial elements in corporate hedging (exchange rate forecasting, strategic management of different exposures, measurement of foreign exchange exposure, hedging ratio, hedging tenor etc.)
  • Be able to read and 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.
Advanced International Financial Management and Hedging:
Exam ECTS 7.5
Examination form Written sit-in exam on CBS' computers
Individual or group exam Individual exam
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Summer, Ordinary exam: 31 July - 3 August 2018

Retake exam: September - October 2018

3rd attempt (2nd retake) exam: November - December 2018

Exam schedule is available on https:/​/​www.cbs.dk/​uddannelse/​international-summer-university-programme-isup/​courses-and-exams.
Aids Limited aids, see the list below:
The student is allowed to bring
  • Any calculator
  • Language dictionaries in paper format
The student will have access to
  • Advanced IT application package
At all written sit-in exams the student has access to the basic IT application package (Microsoft Office (minus Excel), digital pen and paper, 7-zip file manager, Adobe Acrobat, Texlive, VLC player, Windows Media Player). PLEASE NOTE: Students are not allowed to communicate with others during the exam : Read more about exam aids and IT application packages here
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.
4 hour written sit-in exam, new exam question
Exam form for 3rd attempt (2nd retake): home project assignment, max. 15 pages.
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.

In the first class, students are assigned one of 10 journal articles broadly related to five practical topics in FX Management (i.e. exchange rate forecasting, measuring exchange risks etc.) For the Mid-term Assignment (in class 6), they prepare a discussion paper on the article.

The first part of the course (classes 1-6) is lecture based and will bring students to an advanced international financial management level by the Mid-Term Assignment.

Topics include financial markets functioning and organization (Chapters 1-3), exchange rate behavior (Chapters 4), knowledge of hedging instruments, the hedging process (net exposure assessment, forecasting and implementation of hedging strategy)(Chapter 5), and foreign exchange risk theory (accounting exposure, transaction exposure and economic exposure)(Chapters 9-12).

The second part of the course (classes 7-11) is interactive and problem-focused. Students work in groups on the journal article and present them in class. Articles are discussed interactively and managerial implications are derived and summarized. The Comprehensive Review (class 11) will cover both contents from the lecture part and the interactive sessions.


Preliminary assignment:

For the Preliminary Assignment in Class 1 students are required to complete three online courses 

-> Introduction to FX
-> Introduction to Futures 
-> Introduction to Options

by the Chicago Mercantile Exchange (CME) and read a textbook chapter from Hull (2012). These materials will form the basis of a 30 minute in class, pen and paper exercise.

Class 1: Preliminary assignment and introduction into markets
Class 2: Types of risk and hedging instruments
Class 3: Exchange rate exposures 
Class 4: Organization of risk management
Class 5: Hedging Instruments
Class 6: Hedging Instruments II

Feedback activity: Students complete an online exam 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 risk management topics in resarch and practice I
Class 8: Risk management topics in resarch and practice II
Class 9: Risk management topics in resarch and practice III
Class 10: Risk management topics in resarch and practice IV
Class 11: Comprehensive review of class

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 interactive, problem focused and deals with managerial challenges in the financial management of international firms. Students read, present and discuss state-of-the-art academic papers on topics in risk management.
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
Preliminary assignment 20 hours
Classroom attendance 33 hours
Preparation 126 hours
Feedback activity 7 hours
Examination 20 hours
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.


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.

Expected literature

Mandatory readings:


John C, Hull (2012). Options, futures, & other derivatives. 8th Edition. Prentice Hall; Upper Saddle River, NJ [u.a.]. Chapter 1 p. 1-21 (20 pages) Chapter will be uploaded to LEARN.

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 textbook are available and can be used.


Additional relevant readings:


The second part of the course covers practical problems in risk management based on state-of the art research papers. Readings are assigned to students in groups and can be subject to change.

Aabo, T. 2015. Corporate Hedging of Price Risks: Minimizing Variance or Eliminating Lower-Tail. Copies of the article will be made available to students.
Outcomes? Journal of Applied Corporate Finance, 27(1): 57-62.

Amberg, N. & Friberg, R. 2016. Three Approaches to Risk Management—and How and Why Swedish Companies Use Them. Journal of Applied Corporate Finance, 28(1): 86-94.

Anshuman, V. R., Martin, J., & Titman, S. 2011. Accounting for sovereign risk when investing in
emerging markets. Journal of Applied Corporate Finance, 23(2): 41-49.

Bock, J. M. 2013. Evidence from German Companies of Effects of Corporate Risk Management on Capital Structure Decisions. Journal of Applied Corporate Finance, 25(4): 97-103.

Bofinger & R. Schmidt (2003). On the reliability of professional exchange rate forecasts an empirical analysis for the €/US-$ rate. In: Financial Markets and Portfolio Management, 17 (4): p. 437-449. (12 pages).

Brown, G. W. 2001. Managing foreign exchange risk with derivatives. Journal of Financial
Economics, 60(2): 401-48.

Carter, D. A., Rogers, D. A., & Simkins, B. J. 2006. Hedging and Value in the U.S. Airline Industry.
Journal of Applied Corporate Finance, 18(4): 21-33.

Culp, et al. (1998). VALUE AT RISK: USES AND ABUSES. In: Journal of Applied Corporate Finance, 10
(4): 26-38.

Hoyt, R. E. & Liebenberg, A. P. 2015. Evidence of the Value of Enterprise Risk Management. Journal
of Applied Corporate Finance, 27(1): 41-47.

Esty, B. C. 1999. Petrozuata: a case study of effective use of project finance. Journal of Applied
Corporate Finance, 12(3): 26-42.

Naylor, M. J., Chen, J., & Boardman, J. 2015. Real Options in Foreign Investment: A South
American Case Study. Journal of Applied Corporate Finance, 27(1): 110-20.

Pritamani, M., Shome, D., & Singal, V. 2005. Exchange Rate Exposure of Exporting and Importing Firms. Journal of Applied Corporate Finance, 17(3): 87-94. 

Tuckman, B. 2016. Derivatives: Understanding Their Usefulness and Their Role in the Financial Crisis. Journal of Applied Corporate Finance, 28(1): 62-71. 

Zeidan, R. & Rodrigues, B. 2012. The failure of risk management for nonfinancial companies in the
context of the financial crisis: lessons from Aracruz Celulose and hedging with derivatives. Applied
Financial Economics, 23(3): 241-50.

Zeidan, R. & Müllner, J. 2015. Firm, market and top management antecedents of speculation:
Lessons for corporate governance. Journal of Multinational Financial Management.

Last updated on 25/04/2018