Includes index.

Interest Rate Risk, Interest Rate Derivatives and the Management Function -- Fundamentals of Interest Rate Risk -- Financial Derivatives -- Interest Rate Derivatives -- The Interest Rate Risk Management Function -- Checklist for the Review of Chapter 1 -- Interest Rate Risk Management in the Non-Financial Sector -- The Critique of Corporate Risk Management -- In Defence of Corporate Risk Management -- Conclusion on Corporate Risk Management -- Maintaining a Sound System of Control -- Diversification -- Hedging with Financial Derivatives -- Checklist for the Review of Chapter 2 -- Interest Spot and Forward Rate Agreement Markets -- The Spot Interest Rate Market -- Forward Rate Agreements -- Checklist for the Review of Chapter 3 -- Interest Rate Futures Contracts -- Introduction to Interest Rate Futures -- An Exchange Traded Forward Rate Agreement -- A Standardised Contract-the Minimum Conditions -- Major Interest Rate Futures Contracts -- Futures Market Terminology -- The Role of Basis in Interest Rate Futures -- The Futures Hedge Ratio -- Discussion of the Case Studies -- Checklist for the Review of Chapter 4 -- Interest Rate Swaps -- Introduction to Interest Rate Swaps -- Principles of Interest Rate Swaps -- Uses of Interest Rate Swaps -- Structuring Interest Rate Swaps -- The Swap Rate -- Practical Interest Rate Swaps -- Asset Swaps -- Interest Rate Basis Swaps -- Checklist for the Review of Chapter 5 -- Interest Rate Options -- The Fundamental Principles of Options -- Option Pricing -- The Intrinsic Value of an Option -- The Time Value of an Option -- The Greeks -- Exercising Options -- The Risk of the Parties to an Option -- OTC Interest Rate Guarantees -- OTC Option Variants -- Options on Interest Rate Futures -- Option Standardisation -- Option Classification -- Selling Options on Futures -- Checklist for the Review of Chapter 6 -- Strategies with Interest Rate Swaps, Swaps based Derivatives and Swaps -- Strategies with Standard Interest Rate Swaps -- Swaps Strategies with Special Terms -- Swaps as the Underlying Asset of Other Derivatives -- Futures on Swaps -- Options on Swaps -- Strategies Mimicking Swaps -- Checklist for the Review of Chapter 7 -- Strategies With Interest Rate Options and Exotic Interest Rate Options -- Cost Reduction Strategies -- Zero Cost Strategies -- Exotic Options.

As with previous titles in the IIA (Institute of Internal Auditors) series this is a clear and practical guide to a subject of key importance to financial managers. Whether borrowing, investing, saving or trading, a company will always have to take into account the cost of capital and therefore interest rate risk. The highly accessible style explains everything from the basic principles through to the techniques allowing those without prior knowledge to understand the nature and use of a variety of financial tools, including derivative instruments. This is the third part of the trilogy on market risk, the previous two being Managing Currency Risk and Managing Commodity Risk.