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THE TREASURY FUNCTION

Overview

• The corporate treasury function fulfils multiple, important roles within

most organisations. (The function may be interwoven with the other
duties of the financial manager for smaller entities.)

• The treasury function is concerned with managing the entity’s
payments, receipts and cash to make sure that the entity has sufficient

liquidity to meet its obligations, whilst simultaneously, managing
currency, interest rate and other financial risk.

• To fulfil these roles effectively requires a proper understanding of
several areas, including the functioning of foreign exchange markets and
currency risk, as well as interest rates and interest rate risk.

• This learning unit is based on selected sections of the following chapters

in your prescribed textbook (Managerial Finance, 8th edition):

• Chapter 15: The functioning of the foreign exchange markets and currency risk
• Chapter 16*: Interest rates and interest rate risk

• *Please note that you are not required to know detailed calculations
relating to interest rate swaps, caps, floors and collars.

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