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Porsche is taking in more money from its options strategies than it is from the sale of cars. Some of the earnings are on foreign exchange options, but a significant chunk of the profits is coming from the company's huge stake in Volkswagen. Company executives argue they have built the stake in Volkswagen to fend off the takeover of its partner by another company, but others are crying foul, indicating that the company's speculation is too risky. They are questioning whether the company is still a car manufacturer or if it has become a hedge fund. Students are asked to recommend the best course of action.

It is July of 2007 and Alan Frost, executive vice president for AIG Financial Products (AIGFP) has just received a heads up on a margin call from Goldman Sachs. The next day the company served AIGFP with an invoice for collateral worth $1.8 billion on $20 billion notional value of credit default swaps (CDS) related to the housing market. As the market fell, homeowners defaulted, making the value of the securities underlying the CDS plummet. AIGFP had up until this point thought that the prospect of every having to pay up on the CDS was virtually non-existent. Students will have to decide if the company underestimated the risk.