BUU33805 Financial Risk Management

(5 ECTS)

Lecturer: Jenny Berrill                    

E-mail: jberttill@tcd.ie

Office Hours: By appointment, please email me to arrange

Pre-Requisite: BUU22550

Available to Exchange students

Module Description

Risk management is an essential element of a modern finance function. Financial Risk Management is the process of identifying risks, analysing them and making investment decisions based on either accepting or mitigating them. These can be quantitative or qualitative risks, and it is the job of a Finance manger to use the available financial instruments to hedge a business against them. In investment management, risk is managed through diversification and related optimization; while further specific techniques are then applied to the portfolio or to individual stocks as appropriate. In this module, we will focus on when and how to hedge, often using financial instruments to manage costly exposures to risk. We study various types of risk including investment risk and exchange rate risk. We will analyse the tools available to hedge these risks, including various derivative instruments such as forwards, futures, options and swaps.

Learning and Teaching Approach

This module is structured around a series of lectures and tutorials. Lecture slides will be provided in advance of lectures. Students will be provided with practice questions and solutions will be discussed in tutorials.

Learning Outcomes

Having successfully completed this module, the student should be able to:

• Understand the major financial risk management issues facing a firm.
• Demonstrate how to measure and manage various risks.
• Understand the mechanics behind forwards, futures, options and swaps.
• Describe and appraise how derivatives can be used to achieve various hedging and speculative strategies.

Relation to Degree

Workload

College recommends that a 5 ECTS course will have a workload of 100-125 hours.  The following is a suggested breakdown for 100 hours, keeping in mind that students work at different speeds.

Required Resources

Core course textbook:

Hull, J. (2017), Fundamentals of Futures and Options Markets, Eight Edition, Pearson Education Limited

Reference will be made to additional material throughout the course. Please refer to Blackboard for details.

Course Communication

Lecture slides, relevant journal articles, assignment descriptions, announcements and term results will be posted on Blackboard.

Please note that all course related email communication must be sent from your official TCD email address. Emails sent from other addresses will not be attended to.

Assessment

Assessment for this course will be as follows:

• Mid-Term Examination (Individual) – 30%
• Final Examination (Individual) – 70%

Biographical Note

Jenny Berrill is an Associate Professor of Finance at Trinity Business School. She holds a BA degree in Economics and Finance and a Masters degree in Economics and Finance from NUI Maynooth. She holds a PhD degree in International Business and Finance from Trinity College Dublin. She has previously taught courses in Hong Kong, Australia and Spain as well as University College Dublin and Dublin City University in Ireland. Her research interests are in the areas of International Business and Finance, Entrepreneurship and Labour Economics. She has published articles in many journals including Financial Analysts Journal, International Business Review, Social Science and Medicine and Small Business Economics. She is an Associate Editor of the International Review of Financial Analysis