MASTERING INTEREST RATE RISK STRATEGY
A practical guide to managing corporate financial risk
Financial Times Publishing
Financial institutions, private and public companies and governments can lose vast amounts of money from even minor changes in interest rates. Because of this, complex financial instruments have been developed to mitigate these exposures. But what happens when organisations hedge themselves to ill-advised and ill-formulated financial management strategies?
Based on a proven analytical method, Mastering Interest Rate Risk Strategy explains, step-by-step, how to set up and run a sound interest rate risk strategy. Influenced by the author’s work with leading companies and tested with banks, the book will help readers bring risk under control, raise profits and ensure healthy cash flows.
Mastering Interest Rate Risk Strategy:
- Shows you how to mitigate interest rate risk using the most advanced risk management techniques
- Provides you with an analytical method that is proven both academically and in practice
- Uses examples and real life cases to support the transfer of knowledge and skills
Interest rate changes will affect most firms because they will have interest bearing assets or liabilities. As a result, interest rate movements can have an unfavourable impact and managing interest rate risk can be highly beneficial for the firm. But high-profile derivatives blunders show that this is no easy task.
In Mastering Interest Rate Risk Strategy, Victor Macrae shows you how to avoid the mis-selling of derivatives and derivatives blunders and how to set up an optimal interest rate risk strategy.
Mastering Interest Rate Risk Strategy includes:
- Past derivatives blunders and how you can learn from them
- A proven analytical method for strategy formulation
- Hedging theory
- Bank financing for non-financial firms
- How movements in the financial markets may affect the firm
- Financial statement impact of interest rate risk
- The working and risks of using swaps, FRA’s, caps, floors, collars and swaptions
Praise for Mastering Interest Rate Risk Strategy
‘Mastering Interest Rate Risk Strategy is a wonderful and easy to read tour of interest rate risk and its management, and mismanagement, by non-financial firms. Starting with some of the recent large derivative blunders, the book then deftly walks the reader through the basic theory on how to best understand, measure and manage interest rate risk in a very user friendly way. Anyone who wants to better understand why and how non-financial firms should be dealing with interest rate risk should read this book.’
Gordon M. Bodnar, Professor on International Finance, Johns Hopkins University
‘Macrae’s guide is an excellent cookbook for financial professionals that want to manage interest rate risks. The hands-on RISK method by Macrae is an academically sound and practically useful approach to manage the interest rate risks in your company. With the blunders we have witnessed in the use of derivatives in the past decades, now it’s time that financial managers study Macrae’s new book in interest rate risk management. With many cases and examples, this book offers guidance in robust risk management techniques.’
Abe de Jong, Professor of Corporate Finance and Corporate Governance at Rotterdam School of Management, Erasmus University
‘The section on MiFID I and MiFID II, which covers the core legal aspects of customer protection with respect to derivatives advisory and sales, is a clear and easily readable piece that financial professionals dealing with interest rate risk derivatives should be aware of.’
Harman Korte, board member of The Netherlands Authority for the Financial Markets
‘Mastering interest rate risk management is a core capability of treasury. This comprehensive book brings together both knowledge and best practices in this area. A must-read for financial professionals.’
Klaas A. Springer, Corporate Treasurer of FrieslandCampina
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