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DigaMem is a semiconductor firm with a promising new technology, but its CEO faces a difficult financing problem. He is considering issuing a new security: a floorless convertible bond, also known as a "toxic" convertible.

This case examines a bank's ability to manage its credit exposure to a particular client using credit default swaps.

Spreadsheet Supplement for case 203033

This case covers the general characteristics of convertible securities and briefly discusses their history, investors, issuers, and method of valuation.

A major U.K.-based multinational is reevaluating its leverage policy as it restructures its business. The treasury team models the tradeoffs between the benefits and costs of debt financing, using Monte Carlo simulation to estimate the savings from the interest tax shields and expected financial distress costs under several sets of leverage policies. The group treasurer (CFO) must decide whether and how the simulation results should be incorporated into a recommendation to the board of directors and, more generally, what recommendation to make regarding the firm's leverage policy.

A technology hedge fund is trying to decide whether and/or how to hedge equity market risk. Its hedging choices are short-selling and options. The fund has just gone through one of the most volatile periods in NASDAQ's history, it is trying to decide whether it should continue its risk management program of short-selling the NASDAQ index or switch to a hedging program utilizing put options on the index.

Spreadsheet Supplement for case 201071

Spreadsheet Supplement for case 201003.

This case focuses on how much external financing a firm needs and what securities the firm should issue to raise this financing. Cox Communications is a major player in the cable industry, which is consolidating due to technological changes/capabilities brought about by the Internet. The corporate treasury of Cox Communications must decide how much external financing is necessary to finance a series of intra-industry acquisitions that Cox has recently undertaken. The choices are plain-vanilla equity, debt, asset sales, and a new equity-linked derivative known as FELINE PRIDES, offered by Merrill Lynch. The treasurer and his team must make this decision facing the usual market constraints. There are also some special constraints, including maintaining financial flexibility for further acquisitions and limiting the dilution of Cox's largest shareholder, who owns nearly 70% of the firm.

Dell Computer Corp. announced a share repurchase program shortly after a significant stock price drop. In this announcement, the company also states that it will use options contracts. This case looks at the options transactions and how they relate to Dell's employee stock option program and the share repurchase program.