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In March 1921, the Federal Reserve Board (FRB) wrestled with setting monetary policy during a severe economic contraction, called by many a depression. FRB members disagreed over whether to respond to the depression, and if so, how. The depression had sparked a crisis of purpose and policy within the FRB. For the past six years, FRB leaders had been trying to get the Treasury to allow the Federal Reserve (Fed) to pursue "orthodox" monetary policies; but the Treasury had demanded that the Fed implement policies that would support America's war effort. The depression also stoked intense criticism of the Fed from Progressives, Populists, labor, socialists, veterans, and farmers, who charged that the Fed caused the depression, and were now agitating for change. The FRB leaders confronted questions that seemed likely to shape the Fed for years to come. What should be the Fed's role in the American economy? How should the Fed help resolve World War I's debt burden and the resulting inflation? What reforms, if any, should the monetary authorities seek? Perhaps most importantly, was the "orthodoxy" of established practices still appropriate in the world that had emerged from the war?

In the A case, UV7891, the leaders of the Federal Reserve Board (FRB) and the US Treasury confronted questions that seemed likely to shape the Federal Reserve (Fed) for years to come. What should be the Fed's role in the American economy? How should the Fed help resolve World War I's debt burden and the resulting inflation? What reforms, if any, should the monetary authorities seek? Perhaps most importantly, was the "orthodoxy" of established practices still appropriate in the world that had emerged from the war? This B case, set in April 1921, follows the continued efforts of the FRB and the newly installed Harding administration, as they fight the worsening depression.

In May 1932, US president Herbert Hoover and British prime minister Ramsay MacDonald called for leaders from 65 nations to attend the World Economic Conference, scheduled to occur in the winter of 1933 after the American presidential election. Hoover turned his attention to the instructions he would have to give to the American delegation about the forthcoming conference. Arguments by pundits, critics, and Hoover's advisers fell into at least three mutually exclusive camps. Some wanted the United States to assume world monetary leadership, since the world needed a financial hegemon. Others thought the United States should simply promote better financial cooperation among nations, since the world needed cooperation more than hegemony, and hegemony was costly. The third camp wanted the United States to simply let the markets equilibrate, since even mild "cooperation" might sacrifice national self-interest without much benefit. The global economic depression presented a dire situation. All the old rules of international monetary stability had been broken. Now, what new rules should Hoover aim to promote?

Supplement to case UV7884. In this B case, the actual events of the 1933 World Economic Conference are summarized, along with the actions and intentions of newly elected President Franklin D. Roosevelt, and reactions by the domestic press and the international community. It also includes the text of his remarks to the conference.

While still a general partner at Silicon Valley-based New Enterprise Associates (NEA), Ravi Viswanathan considered the challenges presented by evolving market dynamics in the venture capital space. Startups were staying private longer, which led to limited partners thirsty for liquidity and venture capital funds managing overloaded portfolios. Viswanathan and the senior leaders of NEA orchestrated the purchase of 31 NEA unrealized portfolio companies by the newly created $1.35 billion NewView Capital spinout that he would head. This secondary transaction provided liquidity to NEA's limited partners and reallocated NEA partners' time to shepherd other portfolio companies, while at the same time allowing NewView Capital to reap gains from future exits from a portfolio of diverse, high-quality growth stage technology companies. Now, as he prepares to raise Fund II, Viswanathan acknowledges that the unique circumstances that enabled the launch of Fund I would not be replicable, and he must consider alternative strategies to pursue next. Should he continue to focus on secondary transactions, focus on direct investments, or some combination of the two?

In April 1930, US Treasury Secretary Andrew Mellon reviewed recent stock market events as he prepared to enter a meeting of the Federal Reserve Board, which he chaired. In September and October 1929, the US stock market had fallen about a third, and then recovered somewhat. In response to the turmoil, the Federal Reserve (Fed) had lowered the discount rate in five steps from 6% to 3.71%, and market rates of interest across a range of debt securities had followed. Now, given the recovery in the stock market, Mellon wondered what further guidance to give to the Fed, and what actions to recommend to the president and to Congress. What were the lessons of the recent market turmoil? What policies should the Fed pursue? Answers to such questions depended on agreement about the issues to be resolved. Advice streamed in from business, politicians, the press, and pundits of all kinds, and hinged on interpretations of the recent turmoil, which ranged from a standard cyclical correction to an international crisis. This case presents the events leading up to the Great Depression and explores a range of responses and interpretations by participants, contemporary observers, and scholars of economics and history.

This two-part case series (A and B) puts students into the role of Juan Perez, an investment analyst who works for Suprabanco, a fictional multilateral lending institution headquartered in Bogotá, Colombia. The case opens in 2018, when a risk assessment determined that Venezuela might struggle to repay a Suprabanco loan because it was denominated in US dollars. At the same time, the bank wondered if cryptocurrencies had the potential to increase returns and diversify a portfolio. So, Suprabanco assigned Perez two tasks: 1) Investigate the viability of increasing returns by adding cryptocurrencies to a portfolio of investments and, 2) Determine if cryptocurrencies could be an alternative to the US dollar in case the Venezuelan loan situation deteriorated. Case (A) examines cryptocurrencies in general and focuses specifically on bitcoin, including its origins, requirements (technology, community, and liquidity), regulatory environment, and competitors. Case (B) examines the Venezuelan Petro, a sovereign-issued cryptocurrency designed to overcome hyperinflation and US sanctions that locked the country out of international financial markets. Both cases describe decisions facing Perez as an investment analyst and introduce the reader to cryptocurrency opportunities and challenges, blockchain technology, and ethical dilemmas.

This two-part case series (A and B) puts students into the role of Juan Perez, an investment analyst who works for Suprabanco, a fictional multilateral lending institution headquartered in Bogotá, Colombia. The case opens in 2018, when a risk assessment determined that Venezuela might struggle to repay a Suprabanco loan because it was denominated in US dollars. At the same time, the bank wondered if cryptocurrencies had the potential to increase returns and diversify a portfolio. So, Suprabanco assigned Perez two tasks: 1) Investigate the viability of increasing returns by adding cryptocurrencies to a portfolio of investments and, 2) Determine if cryptocurrencies could be an alternative to the US dollar in case the Venezuelan loan situation deteriorated. Case (A) examines cryptocurrencies in general and focuses specifically on bitcoin, including its origins, requirements (technology, community, and liquidity), regulatory environment, and competitors. Case (B) examines the Venezuelan Petro, a sovereign-issued cryptocurrency designed to overcome hyperinflation and US sanctions that locked the country out of international financial markets. Both cases describe decisions facing Perez as an investment analyst and introduce the reader to cryptocurrency opportunities and challenges, blockchain technology, and ethical dilemmas.

In early 2016, ChimpChange Limited, a financial technology (fintech) start-up, had started operations in California and already had more than 80,000 customers. The company needed capital to acquire more customers in order to become cash-flow positive, as was the case with most start-ups. ChimpChange Limited should have been able to attain the break-even number of customers within another year or so, but it needed capital to execute a marketing campaign to attract these customers. It had already undergone several series of funding rounds. At this point, should it return for a series C funding round or should it raise funds through an initial public offering (IPO)? If it were to opt for an IPO, where should this take place?

Options trading is an appealing investment alternative that can enable investors to profit from both share price movements and non-volatile market environments. This note provides a guide for entry-level options traders and is a logical progression from An Introduction to the Pricing of Options (905N14). The note reviews characteristics of options and the factors affecting their valuation, and it outlines several trading mechanisms that new options traders might use as they seek their most effective strategies, including long call, short put, bull call spread, short call, long put, bear put spread, short straddle, short strangle, long butterfly, long straddle, and long strangle.

This case follows Kaspi.kz, a private equity (Baring Vostok) co-owned retail bank in Central Asia that evolved into a fintech, payments and e-commerce company. It provides insights into private equity financing, portfolio company management, and initial public offering practices. In particular, the case focuses on (i) the bank's journey from a traditional bank that serviced only corporations to an online platform, and (ii) the timing and process of preparation for an IPO. The management initially concentrated on profitability, but they soon shifted their emphasis to customer experience. The results were rewarding: Kaspi.kz became the number one player in online commerce, online payments, and consumer financing in Kazakhstan. The challenge of the IPO decisions is its timing: communicating the success of the fast transformation of the firm and its potential for further growth, especially in an emerging market like Kazakhstan, was far from trivial. From a business perspective, even a short delay of six months could potentially add millions of dollars to its value. Kaspi.kz's private equity investor was interested in commencing a formal exit via an IPO, but the valuation was an important consideration. The case also provides a unique insight into financial fragility of the retail banking model, and how integration into an e-commerce platform interacts with the retail banking model.

Hony Capital, a multi-billion dollar private equity firm based in China, is investing in a subsidiary of Jushi Group, a Chinese company that is one of the world's largest fiberglass producers. The specific project will build a plant in the United States. In this case, students consider the value Hony can provide to Jushi, and must also determine how Hony will eventually exit the transaction, given the complexity around its structure.

The application of technology in the area of finance has fostered a slew of innovative financial technology ("fin-tech") based firms. Wealth management and personal financial advisory is one of the industry segments that is witnessing a technology-led transformation across the globe with the advent of a wave of robo-advisors. The case presents an overview of the financial planning and advisory (FP&A) segment in the country prior to the onset of robo-advisors and the impact of robo-advisors on the industry dynamics. It traces the journey of Arthayantra ("the Company"), a leading Indian robo-advisory firm, as it seeks to change the way personal finance is perceived and delivered. It showcases the evolution of Arthayantra in its initial years as it develops its value proposition, puts in place its organizational structure and establishes a customer base in the backdrop of a changing macroeconomic environment. The case closes at a point where Arthayantra is evaluating a strategic pivot from a sole advisory model to an advisory-cum-execution model, encouraging students to analyze the strategic choices that lay before the firm.

This note describes the most common financial ratios and how they provide insight into firm performance. The emphasis is on how ratios summarize operating behaviors and results in ways that facilitate interpretation and highlight decisions. There are three broad categories of ratios covered in the note: profitability, operating efficiency, and leverage (the use of debt financing). The note defines the ratios, explains how they provide insight, and explores complications related to their use. The concepts in this note are applied to the firm Morgan Industries, a setting that has been integrated across all the Financial Analytics Toolkit series of technical notes.

On February 24, 2016, HTL International Holdings Ltd (HTL), a Singapore-based furniture company, announced that it had entered into a purchase agreement with Guangdong Yihua Timber Industry Co. Ltd (Yihua). According to the agreement, which was subject to approvals, Yihua would pay SG$1.00 for each share of HTL. However, the agreement required that HTL meet set profit targets in each of the next three years. A compensation agreement between HTL's controlling shareholder and Yihua stipulated that if HTL did not make its profit targets, HTL's controlling shareholder would make up the shortfall to Yihua. When the agreement was announced, HTL's share price was at $0.70, and the $0.30 gap signalled uncertainty about whether Yihua's shareholders would agree to the acquisition. Minority shareholders and potential investors, who were not bound by the profit guarantee, needed to decide whether they should buy, sell, or hold HTL's shares.

Student spreadsheet to W15991

On February 24, 2016, HTL International Holdings Ltd (HTL), a Singapore-based furniture company, announced that it had entered into a purchase agreement with Guangdong Yihua Timber Industry Co. Ltd (Yihua). According to the agreement, which was subject to approvals, Yihua would pay SG$1.00 for each share of HTL. However, the agreement required that HTL meet set profit targets in each of the next three years. A compensation agreement between HTL’s controlling shareholder and Yihua stipulated that if HTL did not make its profit targets, HTL’s controlling shareholder would make up the shortfall to Yihua. When the agreement was announced, HTL’s share price was at $0.70, and the $0.30 gap signalled uncertainty about whether Yihua’s shareholders would agree to the acquisition. Minority shareholders and potential investors, who were not bound by the profit guarantee, needed to decide whether they should buy, sell, or hold HTL’s shares.

Spreadsheet for product 8B19N019.

Spreadsheet for product 9B19N019.

This note reviews the basics of projecting cash flows for a typical operating decision. To find the economic consequences of any decision, one needs to project the cash flow effects of that decision and discount those at the appropriate hurdle rate. The focus on cash flows arises because any evaluation of economic impact must recognize opportunity costs-the other uses to which one might allocate resources available to a firm. This note discusses two typical ways to organize operating information to calculate cash flow, typically referred to as free cash flow in this context. The first estimates the cash consequences related to various elements of a decision. The second starts with a typical accounting estimate of operating income before taxes and then makes adjustments. The concepts in this note are applied to the firm Morgan Industries, a setting that has been integrated across all the Financial Analytics Toolkit series of technical notes.