Key words
Risk management of banks and corporations
Objectives
Knowledge- In international trade and payments every firm and every bank gets confronted with commercial, political and currency risks. These risks have an important impact on the competitive position and the results of both firms and banks. Students are made familiar with international payment techniques and techniques to hedge these risks. They learn to apply them in a practical situation.
- The increased volatility in the financial markets force banks to hedge their positions in the money and bond markets as well as in the forex markets. Firms are often less conscious about these risks, but they have nevertheless a great impact on the market value of the firm. Hedging these risks is an essential task of both banks and firms. Students get to know different interest-rate hedging techniques.
Skills- Accuracy in handling documents
- Detection of problem situations and solving them
- Critical attitude
- Sense for permanent learning and lifelong study work
Topics
Risk analysis in firms and banks
Correspondent banking and Euro settlement systems
Techniques to hedge or at least limit commercial, political, currency and interest rate risks:- International payment techniques (transfer, documentary collection, documentary credit)
- Currency operations: spot and forward contracts
- Currency options
- Currency futures
- Forward Rate Agreements (FRA)
- Swaps
- Repos
- Interest rate options
Case studies and exercises on the use of the different hedging techniques in practical situations.
Prerequisites
Basic knowledge acquired in the 1st and 2nd year finance.
Final Objectives
Materials used
KBC. Financiële Praktijk van de Buitenlandse Handel, Brussel, februari 2001.
Course material prepared by the lecturer.
Case studies
Financial newspaper (FET) and financial websites for market prices.
Study costs
Photocopies at the standard prices.
Study guidance
Students can consult the lecturer to discuss difficulties either after the lectures or via e-mail.
Teaching Methods
Ex cathedra
Interactive learning
Discussion of case studies
Assessment
First exam session: written exam 100%.
Second exam session: written exam 100%.
Examination Board Flemish Community: (ditto regular student).
Lecturer(s)
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