25763 Corporate Treasury Management

Subject level: Postgraduate

Handbook description

This subject deals with the management of financial price risk in a corporate treasury environment. Students are able to understand and identify financial price risk, measure exposure, set objectives, measure performance and adopt appropriate tactics and strategies, via use of forwards, futures, swaps and options.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

1. understand that due to continuous market volatility financial risk management have become an integral part of doing business
2. understand risk-return profiles assumed by a corporate or an individual
3. understand the financial instruments adopted by corporate treasuries as financial risk management tools.

Contribution to graduate profile

Risk and Hedging provides the course with a specific focus on risk management from the corporate perspective. Features of corporate finance, international finance and investment analysis are drawn upon to assess the risk of the corporate treasury's operation and the management of its cash flows.

Teaching and learning strategies

The subject will be taught using a combination of lectures and workshops. These classes will be supplemented with both printed and electronic learning materials and resources. The UTS web-based communication tool (UTSOnline) will be used to share information and encourage interaction between staff and students. Students will also use appropriate computer software such as spreadsheets and word processors to complete assigned tasks.

Content

• Corporate treasury management — objectives, functions, structure, centralisation vs decentralisation, information requirements
• Treasury performance measurement — quantifying financial price risk
• Tools for managing financial price risk and the impact of risk management strategy
• Determinants of hedging, setting up a hedge, hedging strategy
• Forward contracts and using forwards to manage financial price risk
• Futures and using futures to manage financial price risk
• Swaps and using swaps to manage financial price risk
• Options and using options to manage financial price risk
• 'New' risk management products, hybrid securities, measuring and managing default risk
• Managing financial price risk in a portfolio of derivatives.

Assessment

Assessment item 1: Two Quizzes (Individual)

Assessment item 2: Final Exam (Individual)

Required text(s)

Simos, Andrew, Lecture Notes, 2009

Smithson,C.W., Managing Financial Risk, 3rd edn, 1998, McGraw-Hill, (S)

Indicative references

Allen,S., Financial Risk Management, 2003, John Wiley, (A)

Campbell, T.S., Kracaw, W.A., Financial Risk Management, 1993, Harper Collins, (CK)

Daugaard,D., Valentine,T., Financial Risk Management, 1995, Harper Educational, (DV)

Madura,J., Fox., R., International Financial Management, 2007, Thomson Publishing, (M)

Shapiro,A.C., Multinational Financial Management, 8th ed., 2006, John Wiley, (Sh)

Skully,M.T.et al., Handbook of Australian Corporate Finance, 5th ed., 1997, Butterworths, (Sk)

Stern,J.M., Chew,D.H., New Developments in International Finance, 1988, Basil Blackwell, (SC)

Stern,J.M., Chew,D.H., The Revolution in Corporate Finance, 4th ed., 2003, Blackwell Publishing, (SC)

Hard copy resources provided to each student

1. Lecture notes: These have been written by Andrew Simos and are a summary of the lecture topics. They aim to reduce the amount of time that students spend copying information from lectures in order to ensure that students listen and learn from lectures. They include exercises that will be undertaken during lectures. Fully worked out answers will only be supplied in lectures.
2. Sample quiz questions
3. Sample final exam
4. Brief answers to tutorial problems