Leonard N. Stern School of Business

Deloitte & Touche/Columbia University

COMPETITIVE READINESS PROGRAM

Managing Corporate Financial Risk

Prof. Ian Giddy

New York University


Managing market risk is an increasingly important aspect of corporate financial management. This module provides insights into three difficult aspects of risk management: interest rate risk, commodity price risk and foreign currency exposure. The instructor employs modern principles of finance to address the practical problems of measuring and managing corporate fianial risk in the context of business uncertainties, accounting imperfections and incomplete markets.


AM            Interest Rate and Commodity Risk

Corporate Financial Risk: Transactions, Accounting and Economic Exposure

Integration of Financing and Hedging Decisions

Hedging Instruments Compared

Case Study: "Liberty Travel"

Commodity Prices and the Cost of Carry Theory

Commodity Swaps and Commodity-Linked Bonds

Illustration: "Qantas"


Lunch


PM            Managing Currency Risk

Foreign Exchange and Eurocurrency Instruments

Should Companies Actively Manage Currency Risk?

Anatomy of Recent Accidents

Transactions, Accounting and Economic Exposure

Tools and Techniques for Managing Currency Exposure

Case study: "U.S. Semiconductor"

Guidelines for the Use of Different Hedging Instruments

Managing Financial Risk and the "Value at Risk" Approach

Conclusion and Recap

 

 

Readings:


"A Framework for Risk Management"


"The Management of Foreign Exchange Risk"

Cases:


"Liberty Travel," "Qantas," and "U.S. Semiconductor"

Handout:


"Managing Corporate Financial Risk"

References:


Smith, Smithson & Wilford, Managing Financial Risk, Institutional Investor, 1989


Shapiro, Multinational Financial Management, Prentice-Hall, 1996


Giddy, Global Financial Markets, DC Heath, 1994.


 


Ian H. Giddy, Professor of Finance
New York University Stern School of Business
44 West 4th Street, New York 10012
Tel 212 998-0332 Fax 212 995-4233 

Go to Giddy's Web Portal Contact Ian Giddy at ian.giddy@nyu.edu