個案總覽

Wise allocation of assets across both stocks and bonds can help companies reap higher returns from an asset mix that includes equities without assuming unacceptable risk.

In mid-2003, Morgan Stanley and JPMorgan launched a number of structured credit products that had exposure to correlations in the credit risks of the firms underlying the TRAC-X index: tranched TRAC-X NA, tranched TRAC-X Europe, and options on both TRAC-X NA and TRAC-X Europe. The values of these TRAC-X derivatives were determined by some key parameters: the probabilities of default of each of the firms covered in the index, the recovery rates of the underlying corporate debt instruments in the event of default, and credit risk correlations among the underlying firms (plus, the value of TRAC-X options was also influenced by the volatility of CDS premiums). Tranched TRAC-X and other tranched products were often quoted in the market at prices that were expressed through an implied correlation parameter. Among the issues facing Morgan Stanley's Lewis O'Donald was the implication of the "implied correlation" quotations on the tranched products. Taken at face value, the quotations available in the market seemed to indicate that different tranches on the same underlying index of firms were trading at different implied default correlations. The market prices of the different tranches implied different default correlations for the same set of underlying firms--meaning that credit protection for the same set of underlying firms could be bought or sold at prices that assumed that the defaults of the underlying firms were correlated differently from the viewpoint of different tranches. This correlation skew across the different TRAC-X tranches represented a form of pricing discrepancy.

Teaches techniques of evaluating investment alternatives. A rewritten version of an earlier exercise.

Spreadsheet Supplement for case 204140

The Cartwright Lumber Co. faces a need for increased bank financing due to its rapid sales growth and low profitability. A rewritten version of an earlier case.

This case examines how insiders can expropriate value from shareholders in emerging markets when property rights are ill-defined. As such, it provides a platform for considering how institutions and legal rules impact financing patterns and economic outcomes. CME, controlled by the former U.S. Ambassador to Austria, Ronald Lauder, and its Czech partners win the bidding for the first private broadcast frequency with national coverage in the Czech Republic in 1993. After the entity succeeds dramatically, the primary Czech partner wants to sell his share in the operating company. CME must decide whether to buy the stake and at what price.

Supplements the (A) case.

Supplements the (A) case.

Supplements the (A) case.

Supplements the (A) case.

Supplements the (A) case.

Spreadsheet to (9-204-066). Download only.

Spreadsheet file (HiJinxExhibits.xls) supplements the case.

Spreadsheet to (9-204-111). Download only.

After the company's IPO is withdrawn, the company enters a period of severe financial distress. The consultants recommend that the company be liquidated. The CEO must convince the board, the lenders, and the landlords that the company can and should be saved.

This appendix supplements the multimedia case, "Hugh McColl and NationsBank: Building a National Footprint through M&A". The instructor can use this appendix as a supplement for the convenience of the reader. This document is not intended to substitute for the digital case. Note that Darden Business Publishing also makes available an Appendix that contains 68 pages of printed material drawn from the case: UVA-F-1420. In contrast, this document is an abbreviated supplement that contains only tabular material of financial information. **************************************** This appendix supports student preparation of the associated multimedia case study. See the abstract and teaching note for that case to obtain a summary of the teaching purpose, subject, issues, and classroom applications. Information contained in this appendix is a subset of the information available in the multimedia case and is prepared mainly for the convenience of the student. In particular, this appendix would be useful in executive education settings and where the student needs hard-copy reference to the material in the case. Generally, students who are heavy computer users will find this appendix redundant. Thus, the instructor's use of this appendix is entirely optional and should be linked to the needs of the student.

Supplements the (A) case.

A merchant bank is considering the financing of a leveraged buyout of a private jewelry manufacturer. A representative from the bank must determine what risks are associated with this investment and if the financing fits the banks investment criteria. If he decides to invest in the jewelry manufacturer, he would need to structure an appropriate deal to be competitive with other merchant banks. An Excel spreadsheet with the financial model is available, product 7B04N003.

This case describes the varied instruments that have evolved to facilitate investments in foreign corporations, emphasizing American Depositary Receipts (ADRs) and cross-border listings. It describes the different types of ADRs and the regulatory requirements foreign corporations must meet to list their shares on U.S. stock exchanges. It examines the evolution of cross-border listings as well as recent developments, such as Globally Registered Shares. It also reviews the academic research on the motivations for cross-border listings and provides information on managerial views on the advantages and disadvantages of cross-border listings.

How should the debt of sovereign countries be restructured when countries approach default? Anne O. Krueger of the International Monetary Fund (IMF) is proposing a new approach to sovereign defaults: the Sovereign Debt Restructuring Mechanism (SDRM). The SDRM would create a new international legal framework for sovereign defaults, similar to bankruptcy proceedings in the private sector. A new judicial group within the IMF would oversee the SDRM, and it would be implemented through international treaties. Krueger has to construct a convincing case that the SDRM would be more effective than alternative approaches to sovereign defaults. The case provides information on some major sovereign defaults (the crises in Latin America, Mexico, and Asia) and on the existing institutions and processes that creditors and debtors turn to in sovereign defaults. Students must weigh the advantages and disadvantages of different approaches to sovereign defaults.