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A small manufacturer of camping gear is considering a new product that would expand its market. The product is a portable "hoophouse" that would allow people to begin planting gardens earlier in the season by trapping heat and keeping frost at bay. It would use existing technology but would be a very different product line. The required analyses are simple net present value (NPV) and internal rate of return (IRR) calculations. However, through the lens of managers in the business, this case can generate a rich discussion of the role of NPV analysis, the differences between NPV and IRR decision rules, and the economic meaning of analysis. The case is intentionally simplified to focus student attention on the basic methods of calculating cash flow and the essential meaning of an NPV. It can also be easily expanded to include other topics. For example, by providing information on a potential salvage value, one can explore salvage value impacts.

A newcomer to Canada has the opportunity to start a Chinese restaurant in a small Canadian city. The entrepreneur needs to decide whether to invest in the project, and if so, how to finance it: using debt or equity financing. She has to evaluate the impact of the financing options on the viability of the business, her investment returns, and the financial and business risks. The case provides an opportunity for a comprehensive FRICTO analysis of capital structure, and creates tension by putting the students in a small business owner's shoes.

Spreadsheet supplement for case 216023.

The local government in Delhi has ordered a ban on Nestlé's flagship product in India - Maggi Noodles, citing excessive lead content per government lab tests. Nestlé disputes the government tests, noting that internal and third-party tests show the product to be safe. There is considerable confusion in the media and amongst Nestlé's customers, and Maggi sales begin to plummet. Other local governments and India's federal food-safety regulator also consider bans. Nestlé must decide how to respond - options include suing the regulators and withdrawing the product, which could impact up to 25% of Nestlé's India sales.

In September 2015, Susie reflected on the performance of her personal investment portfolio over the past seven years. Susie had invested in two exchange traded funds (ETFs): Lyxor ChinaH and Lyxor MSIndia. She was now considering Lyxor USDJIA as a third ETF to diversify her risk. This analysis would involve the concept of portfolio diversification and the application of the capital asset pricing model. In addition, Susie would need to calculate mean returns, standard deviations, covariances, correlations, betas, and required returns in order to fully assess the merits of her decision. Although Susie had been satisfied with her portfolio performance over the past seven years, the high growth in these two emerging markets had fizzled out lately. Should Susie diversify her portfolio or remain invested in China and India only?

In early January 2016, FinSAS Financial Research Inc. needed to recruit more programmers because of its rapid growth. However, the average annual salary for financial programmers had been increasing significantly. The financial research company decided that it needed advice from a “programming strategist” from the software engineering industry. The company contacted such a strategist to build a reusable module for use by all company programmers, to avoid coding the same functionality over and over. FinSAS provided access to some of its programs and asked the strategist to prepare a proposal for the project. Would the strategist’s proposal meet the needs of FinSAS and its programmers?

Instructor spreadsheet for product 8B16N004.

In early January 2016, FinSAS Financial Research Inc. needed to recruit more programmers because of its rapid growth. However, the average annual salary for financial programmers had been increasing significantly. The financial research company decided that it needed advice from a "programming strategist" from the software engineering industry. The company contacted such a strategist to build a reusable module for use by all company programmers, to avoid coding the same functionality over and over. FinSAS provided access to some of its programs and asked the strategist to prepare a proposal for the project. Would the strategist's proposal meet the needs of FinSAS and its programmers?

In September 2015, Susie reflected on the performance of her personal investment portfolio over the past seven years. Susie had invested in two exchange traded funds (ETFs): Lyxor ChinaH and Lyxor MSIndia. She was now considering Lyxor USDJIA as a third ETF to diversify her risk. This analysis would involve the concept of portfolio diversification and the application of the capital asset pricing model. In addition, Susie would need to calculate mean returns, standard deviations, covariances, correlations, betas, and required returns in order to fully assess the merits of her decision. Although Susie had been satisfied with her portfolio performance over the past seven years, the high growth in these two emerging markets had fizzled out lately. Should Susie diversify her portfolio or remain invested in China and India only?

Because of the deepening Greek crisis, in October 2015, National Bank of Greece (NBG) was required to sell one of its most valuable assets, Finansbank, the eight largest Turkish bank. There were three potential buyers: Garanti Bank. Turkey's second largest private bank, which was owned by the Spanish bank BBVA; Qatar National Bank, with a strong footprint in in the Middle East; and a private equity consortium led by Finansbank's previous owner and founder, Husnu Ozyegin. Each of these potential buyers had different motivations for the purchase. NBG's motivations were to obtain the highest price and to close the deal as quickly as possible. The identity of the winning bidder would be critically important to the to the future of Finansbank and its employees. Who is likely to the bidding and will the winner be best for Finansbank's future?

Spreadsheet Supplement for case W15136.

Anyone looking at stock charts these days has good reason to feel like cutting their losses. Despite the partial recovery after the Global Financial Crisis, sovereign and consumer debt levels have only increased while commodity prices have plummeted along with China’s economic growth levels, so thinking about rebalancing investment portfolios is clearly a good idea. When thinking about rebalancing investments, it is unwise to let stock charts alone convince you to sell or buy. Stock charts are widely used to help professional and retail investors make decisions regarding when to buy or sell equities. But research shows that stock charts display information in a way that leads to irrational decision making. The problem with using stock graphs to decide whether or not it is time to sell a company’s shares has to do with the importance that people place on observations. Simply put, the most recent past is frequently seen as more diagnostic than the distant past and so lines on a graph can be misleading. Furthermore, research has found that feeling isolated or ostracized causes consumers to pursue riskier financial opportunities.

In 2013, United Bank of India (UBI), predominantly present in the eastern and northeastern parts of India, faces considerable difficulty in managing its swelling amounts of bad debt. A forensic enquiry by an external agency has identified some serious problems in the bank’s credit appraisal process, loan disbursement procedures, and non-performing assets (NPA) detection system. With the bank’s year-over-year growth of NPAs surpassing the growth of its credit, the management team faces the urgent task of developing an effective turnaround strategy to bring the bank back into a profit position.

It was April 2014, and Cadence Chong, a new analyst at YOB Bank Singapore's consumer banking department, is working on her first assignment. Chong has been hired to improve the bank's credit card business, as her manager believed that there was scope for the business to do better. A specific initiative that had been suggested was to enhance the bank's responsiveness to customer feedback on MyDiningDeals, a mobile application that offered special deals and promotions contingent upon customers using their YOB credit cards. Chong was tasked to apply analytical techniques to the user-generated data gathered by the application. She had to analyse the data in response to customer and internal feedback on the division's credit card offerings to investigate how the application could be made more user-friendly. Chong was eager to complete her task as she knew that her analyses and recommendations would help drive up profitability in the credit card division.

One of the University of Cambridge's Colleges evaluates different asset management options for its endowment fund. The King's College, one of the constituent colleges of the University of Cambridge in the UK, had most of its endowment invested in equity index funds. Its committee was to discuss whether they should overhaul their investment strategy. The college had three options. One was to invest in a new pooled fund created by the University, in which other colleges were also investing, another was to invest through a private multi-asset investment firm also used by other colleges, Partners Capital, or remain in index funds.

Crowdfunding has gained substantial interest in the U.S., allowing entrepreneurs to raise startup capital in exchange for equity in their ventures. This approach to equity capital can open up new sources of venture finance to legitimate entrepreneurs, but little attention has been given to how it offers new opportunities for illegal entrepreneurs to defraud investors. We adopt a forensic approach to examine entrepreneurs who launch Ponzi ventures--businesses that continually bring in new investors in order to use their money to pay returns to earlier investors--to demonstrate the ease, creativity, and audacity with which these illegal entrepreneurs operate. The provided examples of Ponzi entrepreneurs show how easily they can circumvent the safeguards purported to protect investors: screening by 'the crowd,' transparency and documentation requirements, independent audit reports, and withholding of funds until the venture's financial goal has been met. In this article, we offer possible solutions to help protect investors, legitimate entrepreneurs, and business in general from the damage created by illegal entrepreneurs.

This case is designed to provide an elementary introduction to options and option pricing for beginning finance students. Analysis of the case requires students to compare the prices of put and call options with various exercise prices and maturity dates on two equities (JPMorgan Chase and Facebook) that had identical closing stock prices on January 14, 2014 but very different volatilities. These common features and differences enable students to do a series of static comparisons that reveal the impact of a change in one determinant of an option's price while holding other factors constant. The business setting involves a mutual fund board considering the initiation of an option trading strategy to enhance the risk-adjusted performance of the fund and, through covered call writing, to increase earned income that can be used to support cash dividend distributions. Although the administrative situation is fictional, the data contained in the case are real. The case is best positioned at the beginning of a course module on derivatives and risk management.