個案總覽

Supplements Fremont Financial (B).

Fremont Financial is an asset-based lender to middle-market companies. This case considers two options for Fremont to raise capital to finance its loan portfolio. Fremont can: 1) extend its existing bank line of credit, or 2) issue commercial paper through a special purpose conduit. The case emphasizes comprehension of Fremont's business as a non-bank lender and the manner by which these two financing choices address asymmetric information and moral hazard problems endemic to financial intermediation.

Fremont has a third option to finance its loan portfolio, which involves securitizing and selling the small-business loans into the capital markets. Emphasizes asymmetric information and moral hazard problems involved in designing an asset securitization. When used in conjunction with the (A) case, the sequence highlights the relative strengths and weaknesses of institutions and markets in providing solutions to funding problems.

Spreadsheet Supplement for case 294098

Fremont Financial is an asset-based lender to middle-market companies. The firm has three options to raise capital to finance its loan portfolio. Fremont can (1) extend its existing bank line of credit, (2) issue commercial paper through a special purpose-conduit, or (3) securitize and sell the loan portfolio into the capital markets. The case emphasizes the problems and potential solutions to asymmetric information and moral hazard problems that are endemic to financial intermediation.

Spreadsheet Supplement for case 294054