Financial Derivatives in Corporate Finance: Managing Risk and Creating Value

Course Code
FIN 580
Hours
2.25 hours
Type
Elective
Offered
  • Fall 18 (A)
  • Fall 19 (A)
  • Winter 18 (A)
  • Winter 19 (A)
  • Winter 20 (A)

Financial Derivatives in Corporate Finance: Managing Risk and Creating Value --- Financial derivatives play several important role in corporate finance: They can be used to hedge risks, they are the building blocks for analysis of corporate credit risk, and they serve as analytical tools to value corporate investment projects that have built-in flexibility, e.g., due to a multi-stage structure or timing options. In this course, we introduce the core principles that underlie the valuation and use of derivatives such as futures, swaps, options, and credit derivatives. We apply these ideas to a number of problems including hedging of interest-rate, foreign exchange, and commodity price risk, real options in investment decisions, and transfer of credit risk. With a focus on corporate value creation, we pay particular attention to potential misuses of derivatives and unintended consequences of corporate financial engineering in the face of financial market imperfections.

Taught By
Jonathan Carmel
  • Lecturer of Finance
Jason Hall
  • Lecturer I in Business
Jason's research into equity valuation and the cost of capital has led to 15 publications and been relied upon by corporations listed on the...