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In 2001, Bank Leu, a Swiss private bank, is considering creating the world's first public fund for catastrophe bonds. Cat bonds are securities whose payments depend on the probability of a catastrophe occurring, such as an earthquake or hurricane. Cat bonds are traditionally issued by large insurance or reinsurance companies. This case outlines the traditional reinsurance market and securitization efforts that have taken place in the past and focuses on Bank Leu's decision as a buy-side participant in the cat bond market.

In 2002, Swiss Re, the world's second--largest insurance company, is considering securitizing parts of its risk portfolio in the capital markets. This would be a first for the company that, until then, had never transferred risk off its balance sheet. Peter Giessmann, head of the Retrocession Group, is considering catastrophe bonds as a way of transferring risk. "Cat bonds" are securities whose payments depend on the probability of a catastrophe occurring, such as an earthquake or hurricane. This case outlines the traditional reinsurance market and securitization efforts that have taken place in the past and then focuses on Swiss Re's decision as a sell-side participant in the cat bond market.

All securities can be evaluated based on certain common characteristics: value, rate of return, risk, maturity, and so forth. This case examines how bonds are valued and how their rates of return are computed. It begins with basic definitions and features of fixed-income instruments and proceeds to basic bond mathematics. An overview of the U.S. Treasury market is provided, as well as some national markets for other important domestic government bonds.

This case explores two measures of price sensitivity: duration and convexity. These measures are normally used to gauge how sensitive a bond's price is to a change in interest-rate levels. However, as concepts, both duration and convexity have wider application: duration and convexity take into account any change for any risk factor affecting the price of any financial instrument.

Spreadsheet Supplement for case 205008

In 2003, Zara's CIO must decide whether to upgrade the retailer's IT infrastructure and capabilities. At the time of the case, the company relies on an out-of-date operating system for its store terminals and has no full-time network in place across stores. Despite these limitations, however, Zara's parent company, Inditex, has built an extraordinarily well-performing value chain that is by far the most responsive in the industry. The case describes this value chain, concentrating on its operations and IT infrastructure.

Spreadsheet supplement for 604-081.

Abstract to follow.

Describes the financing and growth decisions facing Direvo, a young German biotech firm with a customer/partner that wants to become an investor. Also discusses the business model for Direvo's directed evolution technology, with applications in both industrial enzymes and pharmaceutical products, either through partnerships or its own product development, with very different risk/return structures. The resulting hybrid business model is a constant source of discussion between the Direvo management team and the lead investor, Techno Venture Management. How should Direvo extract value from the spectrum of business options to develop an optimal exit strategy?

Since the 1970s, world-renowned architect and designer, Alessandro Mendini, has acted as adviser and counselor to Alessi, the Italian household goods design factory. By discussing Mendini's role as art director, the case introduces the artistic side of Alessi, where design ambitions need to be balanced with business considerations. Includes color exhibits.

Supplements the (A) case.

Supplements the (A) case.

Describes the intricate parts of an early real estate deal from the standpoint of the developer including feasibility analysis, market choice, acquisition of land, project development, design and construction issues, investment returns, and equity financing issues. Thirty-two-year-old Dr. Philipp von Wilmowsky is director of Hungarian operations for ECE Projektmanagement, a German real estate development conglomerate. He has been working for two years on the development of a 30,300 square-meter (m2), 75 million Eurodollar shopping project located in the city of Gyor, Hungary. Allows students to analyze the viability and attractiveness of the project and perform calculations on project returns (including co-investor returns), cost analysis, sensitivity analysis, composition of leasing revenues, and loan structuring.

Profiling nonsystematic risk for a bond investor, the case describes lottery bond issues by the Swedish National Debt Office (SNDO). Swedish lottery bonds are a specific type of financial fixed income instrument for Swedish retail investors. The distinctive feature of lottery bonds is that, unlike traditional institutional bonds, the normally guaranteed interest--the coupon--here only is paid as "wins" to bondholders selected in drawings. The case takes place in March 2003, when Anders Holmlund, head of analysis, is reviewing the proposal for the next lottery bond issue. While reviewing the features of the bond issue, he also considers the larger picture: What are the benefits to the Debt Office of issuing lottery bonds, especially in view of a recently launched Internet-based sales system that allows retail investors to take part in government bond auctions?

Focuses on how Deutsche Borse's (the German stock exchange based in Frankfurt) acquisition of a 50% stake in Clearstream International, a company specialized in clearing, settlement, and custody of securities across borders, may or may not confirm its position as the world's largest securities trading and related technologies powerhouse. Deutsche Borse had become a "transaction engine" and operates as an exchange, offering a wide range of financial services and products (cash market operations, derivatives, information products, clearing, settlement custody). The company uses technology to support and fuel innovation.