個案總覽

Second in a series on PepsiCo's bid for Quaker Oats. Describes the negotiations between PepsiCo and Quaker including due diligence process, first bid and counteroffer. Quaker's counteroffer included a collar on equity consideration, and thus the case offers an opportunity to discuss and value these contractual devices.

Financial statements provide company employees, investors, lenders, competitors and shareholders with an understanding of a company's operating results and financial condition. The topics discussed in this note include the statement of earnings, the balance sheet, the statement of retained earnings and the auditor's reports and footnotes.

This case examines the challenges Citibank is facing in implementing e-business strategies. The focus is on how Citibank has developed an e-business strategy that fits with its corporate business strategy. Citibank not only needs to use information technology to improve internal operations and provide more efficient customer services at lower costs, but it also needs to ensure that its single, global online platform can serve the highly segmented market. At one end of the spectrum of the market are multinationals and top-level domestic corporations that operate sophisticated treasuries, and at the other end are companies and small- and medium-sized businesses that are not yet ready to upgrade or transform their systems.

Since late 2003, Merrill Lynch & Co., Inc ("Merrill Lynch") had become the world's largest underwriter of collateralized debt obligations ("CDOs"). The assets of CDOs comprised some of the riskiest tranches of mortgage-backed securities mostly tied to subprime mortgages. With the collapse of the subprime mortgage market and declining liquidity in the summer of 2007, Merrill Lynch was caught with a substantial number of CDOs that had diminished sharply in value. Disillusioned with chief executive Stanley O'Neal's leadership, the management of Merrill Lynch called for a series of meetings to assess the firm's exposure to subprime-backed CDOs and redefine its risk-management strategy. To the management, an embarrassing write-down seemed inevitable for the third quarter of 2007, but how much of such assets should be written down and how quickly? What would be the implications for the firm in making such an announcement?

Post-Apartheid South Africa has been characterized by high levels of crime, but also by sustained increases in the income levels of the previously disadvantaged black community. Cash is the preferred method of payment for new entrants into an economy, but it is also an attractive target for criminals. Deposita has seized the business opportunity presented by this tension, and developed an automated banking machine, basically an "ATM in reverse." As soon as businesses feed their cash into the machine on their premises, information about the deposit is relayed via a cellphone network to the Deposita database. With the realization that Deposita offers a cash management system that not only eliminates the time, cost and inaccuracies of manual cash counting, but also gives businesses remote visibility into the movement of cash, interest in Deposita grew rapidly, both within South Africa and internationally. The case highlights the systemic nature of innovation, technology-enabled innovation at the base of the pyramid, hyper-mediation, and the tension between product and geographic expansion as the owners of Deposita redirect their strategic focus to the entire cash value chain in South Africa or to international markets or both.

This case is suitable for courses on corporate finance at the graduate or advanced undergraduate level that cover banking, financing, security design, capital structure, or capital markets. The case covers the events that led to the collapse of Bear Stearns's (Bear's) hedge funds in July 2007 and traces management's response to the situation through January 2008. These events include macroeconomic factors that fueled the housing boom, the growth of securitization, structured products, and credit default swaps, and the maturity mismatch of financial institutions' funding strategies. The case provides a rich setting for students to understand the increasingly interrelated nature of banking activities, which poses large systemic risk to the financial sector. Two key questions are posed: "What factors were responsible for the collapse of Bear's hedge funds?" and "Was the response by Bear's management adequate in light of the collapse and the credit problems that ensued?" John Corso is a hedge fund manager with large cash balances in a prime brokerage account at Bear. In January 2008, he receives a call from a senior Bear executive reassuring him that the firm is in good hands following a shakeup of top management. The previous summer, two Bear hedge funds collapsed as a result of their investments in collateralized debt obligations (CDOs) that were backed by subprime mortgages. As a longtime client of Bear, Corso must evaluate whether the steps taken by management have been sufficient to resolve its credit problems or whether now is the time to remove his funds from the firm.

This case is suitable for courses on corporate finance at the graduate or advanced undergraduate level that cover banking, financing, security design, capital structure, or capital markets. The case covers the events that led to the collapse of Bear Stearns's (Bear's) hedge funds in July 2007 and traces management's response to the situation through January 2008. These events include macroeconomic factors that fueled the housing boom, the growth of securitization, structured products, and credit default swaps, and the maturity mismatch of financial institutions' funding strategies. The case provides a rich setting for students to understand the increasingly interrelated nature of banking activities, which poses large systemic risk to the financial sector. Two key questions are posed: "What factors were responsible for the collapse of Bear's hedge funds?" and "Was the response by Bear's management adequate in light of the collapse and the credit problems that ensued?" John Corso is a hedge fund manager with large cash balances in a prime brokerage account at Bear. In January 2008, he receives a call from a senior Bear executive reassuring him that the firm is in good hands following a shakeup of top management. The previous summer, two Bear hedge funds collapsed as a result of their investments in collateralized debt obligations (CDOs) that were backed by subprime mortgages. As a longtime client of Bear, Corso must evaluate whether the steps taken by management have been sufficient to resolve its credit problems or whether now is the time to remove his funds from the firm.

Student spreadsheet to case UV1064

Why do shares in NEC Electronics, a publicly listed subsidiary of Japan conglomerate NEC trade at a discount to their fundamental value? Can Perry Capital, a U.S. hedge fund, restructure this subsidiary and generate significant returns? This case provides students with an opportunity to analyze Perry's decision to invest in NEC Electronics. In doing so, it asks for the reasons that NEC might take actions that destroy value and shift value away from NECE's minority shareholders. The events covered allow for a discussion of how ownership concentration constrains restructuring alternatives, how hedge fund investors might confront controlling shareholders, and how the mispricing of agency costs can give rise to ownership structures that allow for minority shareholder expropriation.

A group of six university students wondered if they should proceed with Pack-iTS, an entrepreneurial venture. Pack-iTS would be a healthy lunch preparation and delivery service serving some of the elementary schools in London, Ontario. The students must analyze the marketing, operating and financial aspects of the business venture to determine the promotion strategy and financing requirements before making a decision as to whether to proceed with the new venture.

Banco Compartamos was formed in 1990 as a non-governmental organization to aid the poor in rural areas of Chiapas and Oaxaca, Mexico by providing microloans. In 2001 Carlos Danel and Carlos Labarthe took the organization private and then in 2007 took Compartamos public in an IPO valued at $1.53 billion. Compartamos executives received $150 million of the $450 million in proceeds. Banco Compartamos became one of Mexico's most successful banks, with an average return on equity of 40 percent since becoming for-profit. Critics, however, charged that Compartamos managed its business to benefit its investors, not its borrowers and did a disservice to the world of microfinance. This case briefly explores Banco Compartamos and microfinance approaches.

These instructional materials are positioned to be a useful means for reviewing certain aspects of financial reporting. They are purposeful, yet a bit playful; discussion-oriented, yet focused on the important dimensions of the financial reporting world. In particular, the six tasks presented pertain to: The nature of the different sets of books companies keep in order to comply with external financial reporting requirements, income tax laws, and internal operating decision-making needs; Seven recurring components of a typical corporate annual report; Foundational accounting concepts; Perspectives of various constituencies regarding the financial reporting standards-making process; The issue undergirding the adoption of international financial reporting standards; Highlight several contemporary, hot-button financial reporting issues.

Frustrated by not being able to find a pair of red cowboy boots in her size, a Florida woman, who works as a bookkeeper, and her out-of-work husband decide to open their own business. Although the store manages to earn a small profit, early sales returns dampen the couple's enthusiasm. Now they need to plan for the year ahead. Students are given a balance sheet and income statement for 2006, and are asked to prepare a forecasted balance sheet and income statement for 2007.

In mid-January 2008, Merrill Lynch announced a $6.6 billion mandatory convertible-preferred share issuance, much of which was placed privately with the Kuwait Investment Authority (KIA), the Korean Investment Corporation (KIC), and the Mizuho Corporate Bank. The case is set amid the subprime-mortgage crisis, which plagued banks and depleted their capital. It focuses on the decision of John Thain to issue capital and place it with sovereign wealth funds (SWFs) in an effort to stabilize the company and put it on the road of growth and profitability again. The case describes the various types and origins of SWFs, their orientation, and their recent intensive investment activity in the global financial-services sector. The case also discusses the transparency of SWFs and their role in the global financial system as liquidity-providing long-term players. Finally, Merrill Lynch's decision to issue the specific financial instrument to replenish its capital (mandatory convertible-preferred) and its terms are analyzed.

In 2006, Merrill Lynch became the lead book runner for a $5 billion convertible bond issue for MoGen, Inc., which was the single-largest convertible bond issuance in history. Merrill Lynch's Equity Derivatives Group needed to convince MoGen's management of the best coupon rate and conversion premium for MoGen and the potential investors in the issue. This pricing decision requires students understand the concept of valuing a convertible as the sum of a straight bond plus the conversion option. Valuing the conversion option as a call option requires the estimation of the Black-Scholes model, with the volatility being a particularly challenging input. The case is designed for students who already have a basic knowledge of bond valuation and option-pricing principles and works well with undergraduate, MBA, and executive education audiences. The instructor may choose to teach the case in one class period or two.

Spreadsheet supplement for case UV1054.

Spreadsheet Supplement for case 109031

This case examines the challenges in implementing fair value accounting for mortgage instruments, the role of accounting in the sub-prime crisis, and proposals for revising accounting standards given the crisis.

This technical note introduces the basics of forward and futures contracts. It covers the very simplest contract on financial assets with no income and expands the discussion to cover contracts on financial assets with dividends, contracts on foreign currency and commodities. There is a discussion on the difference between forward/futures prices and the expected spot rate.

This technical note covers the pricing of warrants. The note derives the basic formula for the pricing of warrants and offers a simple example to demonstrate the underlying concepts.